INDIVIDUAL VS GROUP INSURANCE – BENEFITS AND DRAWBACKS?

Individuals purchase insurance to cover themselves against certain crisis situations such as medical emergencies, death, or injury that could result in physical and financial losses. These individual insurances can be purchased from dozens of insurance providers in the market. However, as the name suggests, individual insurance provides coverage only to that lone individual on whose name the policy has been purchased.

Group insurance on the other hand secures not just one person but all those members of the group who have been named as beneficiaries of that single group insurance plan. These group insurance policies can be group health insurance policies for employees of a company as well as group travel insurance policies for a group of travelers.

In this blog, Student Cover brings you the benefits of purchasing group insurance over individual policies.

Easy to manage

These days, most organizations provide health insurance coverage to their employees. They do it through group health insurance policies which provide almost the same cover to all employees. The premium is paid by the organization to a single insurance provider on an annual or monthly basis. Some organizations even include group health insurance premiums are part of the cost to the company (CTC) while negotiating salary packages with prospective employees.

The main benefit for the company is that, in times of crisis which might result in several employees falling sick or getting injured, it can ask a single insurance provider to pay for the medical expenditure incurred in the treatment of its employees. Moreover, as the insurance premium to be paid for the group is known in advance, and is mostly paid annually, it gives organizations time to prepare the budget for premiums on such group insurance plans.

Same benefits to all

Unlike individual insurance policies where the extent of coverage depends on each individual’s own insurance policy, the group insurance policy ensures that all employees under the policy are provided the same coverage. This helps in bringing equity among employees. Moreover, the similarity of benefits also helps individual employees to contact the insurance provider for coverage in times of emergency even if no official is present at the moment.

Nobody left behind

Insurance coverage depends on the purchase of an insurance policy by an individual. If one has not purchased an insurance policy, he or she is not eligible for insurance coverage in times of crisis. The group insurance policies ensure that all employees of the organization are adequately covered under a single insurance plan even if they have not privately purchased any insurance policy.

Such policies, especially when a group is on a trip, are very useful as they would be able to meet the expenses incurred in the treatment of any of the employees if he or she falls sick or meets with an accident. In the absence of such a group travel policy, those individuals who do not have personal insurance policies would have to meet the medical expenses all by themselves.

Relatively cheaper

Unlike individual insurance products where the price of the premium is fixed and determined individually based on age, gender, pre-existing diseases, etc., the premium for group insurance plans is negotiable. In addition to that, since the total premium of a large group of people is much higher, insurance companies offer attractive discounts on group insurance policies thereby bringing down the overall cost of premium per person less than that of individual insurance plans.

Organizational liability

There are occasions when an employee might get injured while working with a tool or machine in the office. Incidents like these may make the organization liable to compensate the employee or pay for the treatment of such employees. This means that the organization would have to pay the medical bills from its coffers. If employees are provided insurance through group insurance plans, it removes the organization’s liability.

Waiting period and maternity benefits

Most individual health insurance policies have waiting periods for certain diseases and maternity benefits. This is done to prevent people from buying insurance to meet their expenses. However, most group health insurance policies offered by organizations to their employees have provisions for maternity benefits for female employees including medical expenses incurred during childbirth.

In addition to that, there are also several group health insurance policies that provide cover for pre-existing ailments. Unlike individual health insurance, employees do not have to undergo a long waiting period to avail the benefits of the health insurance policy.

While group insurance policies provide above mentioned benefits to employees, certain drawbacks also need to be mentioned. They are as follows:

Group Insurance not renewable for life

In contrast to individual health insurance policies, group health insurance is not renewable for life. It means that an individual beneficiary of group insurance gets covered as long as he or she is part of the group i.e. the company. If an employee leaves the company, the company may strike off the employee from the list of beneficiaries of the group insurance policy and seek a refund of the premium on a pro-rata basis, provided the employee had previously not made any insurance claim on that policy.

No Choice

With individual insurance plans, one can choose the extent of coverage and sum insured as per one’s requirement. However, group insurance policies are generalized policies meant to provide cover to a group of individuals. Therefore, an employee has little say in deciding the plan as per coverage and sum insured. He or she has to accept whatever plan the employer has chosen for the employees.

Both group insurance and individual insurance plans have their own merits and drawbacks. They serve a similar but different set of requirements. We hope that the readers will find the content of this blog useful in choosing the best insurance plan for themselves.

Secure Cover (a sister concern of Student Cover) provides dedicated group insurance plans for business enterprises. At present, Secure Cover has many reputed clients to its name who are satisfied and happy with its Insurance product and services.

Disclaimer – The content of this blog is based on the personal research of the writer. Readers are advised to evaluate each insurance policy carefully and exercise their own judgment before purchasing any insurance policy.