A recent survey has shown that about 30 percent of Indian population are devoid of any health insurance. Essentially, this stems from not having the correct healthcare plans. With that said, group healthcare insurance is offered to their employees by many organisations in an attempt to alleviate the healthcare crisis.
Group Health InsuranceHowever, many people are still opting for additional individual health insurance. What are the key differences and similarities to consider when comparing group vs individual health insurance?
Essentially, group health insurance refers to the type of health insurance coverage that employees working for the same organization. In general, an organization should have a minimum of 20 employees to offer this option.
Employee group health insurance is generally offered to an organization’s employees free of charge. This is primarily because the employer pays the premium on behalf of the employee.
For the most part, this type of policy covers the hospitalization expenses of the employee and their immediate family. Each member has a prescribed cover limit, depending on the policy taken out by the company.
There are currently several different group health insurance options available in India. These can be referred to as:
Often called personal health insurance, individual health insurance refers to a health policy taken out by an individual. That means the premium is covered entirely by the policyholder. Healthcare, medical and hospitalisation is covered under this plan.
An individual health insurance policy refers to coverage taken out by an individual for themselves or their family. Since this policy isn’t taken out through the organisation they work for, they have the freedom to choose the insured company, type of policy and number of beneficiaries.
The types of individual health insurance options available in India are listed:
We’ve drawn up a side-by-side comparative table to highlight the key differences between group health insurance and individual health plans.
| Factors to Consider | Group Health Insurance | Individual Health Insurance |
|---|---|---|
| General Definition | Health insurance for a group of people working for a specific organisation | Health insurance policy for an individual |
| Who is Insured | Employee and immediate family | Coverage is for an individual only |
| Who is the Purchaser | Organisation where individual works | Individual purchases the cover out of pocket |
| Level of Control Insured Has | Very little – company chooses the type of insurance as well as the health provider | Individual has 100 per cent choice over the company and type of insurance |
| Options to Buy Add-ons; | Limited add-on options | Many different rider add-ons available to be purchased |
| Claims Procedure | Insured will review the claim and base a decision on policy terms | Insured will review the claim and base a decision on policy terms |
| Exit Criteria | Leaving the company or retiring. An active employee can also cancel cover by submitting a 30-day written notice | Policyholders can choose to cancel their cover at any time |
| Coverage of Pre-existing Conditions | Yes, immediate cover | Not all plans will provide coverage for pre-existing conditions |
| Maturity Benefits | No | Only if the initial plan is purchased with maturity benefits |
It’s estimated that only 37% of the Indian population is covered by employment-based insurance. That means there is a large market that prefer to opt for private or individual health cover. If you’re considering buying a health insurance policy it’s important to understand the difference between a group plan compared to an individual plan.
In general, group health insurance refers to the type of cover taken by employers for their employees. In most instances, the employer will pay the full amount of the premium and primary hospitalization is covered. The employee doesn’t have any choice over the type of coverage and insurance company used.
An individual takes out health care for themselves or their family (usually a spouse, children, and parents.) In this instance, the policyholder is liable for the full premium and has the freedom to choose the insurance company, type of policy, and benefits. The policy can also be upgraded at any time by purchasing add-on riders.
With the group health insurance policy, employees and their immediate family members are covered. In some instances, cover may be restricted to the employee only.
Individual health insurance policies can either be taken out for the individual alone or themselves and their spouse, children, and parents. Premiums will be determined by the type of coverage taken and the benefits requested.
The organization purchases the health plan on behalf of their employees.
In the instance of individual health policies, the insured chooses and purchases the policy.
The employee working for a company that offers group health insurance has no control over the insured company or the type of benefit.
An individual has total control over their policy. They decide who the insurance company should be, the type of policy, and the benefits they will need.
Some group policies might offer limited add-on options that fit into the current policy they have in place for employees.
With individual policies, the insured can request as many add-ons as possible in the form of riders to provide them with the most extensive coverage.
Claims are reviewed by the policy provider and authorisation will be determined by the criteria of the policy.
As with group health policies, claims need to be pre-authorized based on the limitations set out in the policy.
To exit a group health policy, an employee needs to submit 30-days’ written notice. Resignation or retirement also terminates the policy.
If an individual wants to exit a current policy, they can do so at any time. The insurance company criteria might require a notice period requirement.
With group health insurance options, pre-existing diseases are covered immediately once the policy is activated.
While individual health insurance policies also cover pre-existing illnesses, it may take some time to get this approved.
Group health insurance covers don’t offer any maturity benefits. An employee doesn’t receive any benefits at the end of its policy when they leave the company through resignation or retirement.
Individual health insurance policies offer maturity benefits if that’s the type of policy the individual requests when taking out the policy.
While it’s true that having group health insurance has many benefits, insurance experts agree that solely relying on it isn’t always smart. Some of the reasons for this are discussed below.
Generally, the Employee State Insurance Scheme (ESIS) is only mandatory for employees earning INR 21,000. This means there will still be job types that don’t have insurance on offer. When a person transfers from a company offering insurance to a company that doesn’t have it on offer, the individual will be at a huge disadvantage.
Organisations are not compelled by law to maintain certain types of health insurance. Essentially this means that a company can reduce their insurance coverage at any time to offset a financial hardship. In these instances, family health insurance cover can change from covering your whole family to just covering the employee.
Additionally, the company could also opt for a policy with reduced coverage or request that employers co-pay a part of the premium. With limited coverage, an individual who requires chronic care might not afford their required care.
Generally, most group health insurance covers only provides coverage of Rs 2 to 3 lakh. Based on the rates of current inflation, the majority of the population will be considerably underinsured if they rely solely on the group cover. Many people bridge this gap with individual health insurance.
It’s very rare for group health insurance coverage to last into your retirement. This is rather unfortunate considering that most individuals are in theory covered by this cover throughout their whole working life.
When it comes to group vs individual health insurance, one is not necessarily better than the other. Essentially it comes down to what you and your family’s healthcare needs are. It’s also an excellent idea to consider adding an individual health insurance policy to your existing group policy. This will prevent being uninsured in sudden medical emergencies.
The most significant benefit of group health insurance is that risk is spread across a larger pool of insured individuals, allowing for lower premiums to policyholders. By keeping the premiums low, health insurers can better manage potential risks.
There are several advantages of individual health insurance. The most prominent of these is that you’re able to choose the insurance company and the plan best suited to your needs. Furthermore, you can renew or amend any active policies during the annual open enrolment period.
For the most part, group health insurance is considerably lower than individual plans. The reason for this is that risk is spread across a bigger group of people, enabling the lower premium. In short, the more people on a plan, the cheaper the cost.
Insurance experts recommend that people have both group and individual health insurance. This practice is perfectly legal in India and ensures that the individual and their family are covered in a medical emergency.
A health insurance premium calculator is a popular online tool that enables users to calculate and compare premiums from various insurance companies. This tool uses information such as your age, the number of dependents, required insurance amount, policy tenure and several other varying factors to give you a policy estimate. Most companies, such as PNB Metlife, have access to this health insurance calculator on their websites.
Another positive aspect of individual health insurance plans is the tax benefits on offer. Generally, an individual can easily claim a deduction of up to Rs 25,000 for an insurance policy that covers themselves, their spouse and dependent children. If the insured’s parents are on the policy, the tax benefit can be claimed to the extent of Rs 25,000 if they are younger than 60 years old.
Despite some health insurance plans being quite comprehensive, there are a few general exclusions that are similar across all types of health insurance plans. These generally include cosmetic treatments, plastic surgery, routine Lasik treatments, and gender-change surgeries. Many health insurance plans also don’t cover fertility treatments, surrogate pregnancies, and certain dental treatments.
One of the top factors that group and individual health insurance options have in common is their ability to provide necessary financial backup in the event of a medical emergency. For the most part, coverage is provided for hospitalization and doctor’s expenses.
Disclaimer:
The aforesaid article presents the view of an independent writer who is an expert on financial and insurance matters. PNB MetLife India Insurance Co. Ltd. doesn’t influence or support views of the writer of the article in any way. The article is informative in nature and PNB MetLife and/ or the writer of the article shall not be responsible for any direct/ indirect loss or liability or medical complications incurred by the reader for taking any decisions based on the contents and information given in article. Please consult your financial advisor/ insurance advisor/ health advisor before making any decision.
PNB MetLife India Insurance Company Limited Registered office address: Unit No. 701, 702 & 703, 7th Floor, West Wing, Raheja Towers, 26/27 M G Road, Bangalore -560001, Karnataka
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Terms & condition apply, Benefits stipulated are subject to premiums paid and policies in-force. For more details on risk factors, please read the sales brochure and the terms and conditions of the policy, carefully before concluding the sale. Tax benefits are as per the Income Tax Act, 1961, & are subject to amendments made thereto from time to time. Please consult your tax consultant for more details. Goods and Services Tax (GST) shall be levied as per prevailing tax laws which are subject to change from time to time. The marks "PNB" and "MetLife" are registered trademarks of Punjab National Bank and Metropolitan Life Insurance Company, respectively. PNB MetLife India Insurance Company Limited is a licensed user of these marks. Call us Toll-free at 1-800-425-6969, Phone: 080-66006969, Website: www.pnbmetlife.com, Email: indiaservice@pnbmetlife.co.in or Write to us: 1st Floor, Techniplex -1, Techniplex Complex, Off Veer Savarkar Flyover, Goregaon (West), Mumbai – 400062, Maharashtra. Phone: +91-22-41790000, Fax: +91-22-41790203.
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