Difference Between Individual And Group Health Insurance Plan

You might think that it is straightforward to understand that the individual policy is for a single person while a group insurance policy might cover one group of people, but it is so much more than this. If you know what the differences between both these policies are, you will be able to pick the best one for you quickly. Both of them give the same coverage, but depending upon who is purchasing it and what are the benefits you are aiming for, the differences are to be taken into consideration then.

To understand the differences between the group insurance policy and individual policy, let us first understand what these terms are:

  • Group Insurance policy is an insurance policy than one organization purchases for benefitting the people who work for them or all of their employees. The organization might want a customized insurance policy or want one offered by the insurance company as a part of their body.
  • Individual insurance policy is the insurance policy, the applicant purchases for oneself, their family members or group. The term could mislead you into thinking that it is only meant for a single person who is not the case. All it implies is that an individual buys it instead of a company.

Here are a few noteworthy differences between the two:

  • The amount of premiums to be paid: It is easy to guess that the group insurance policy plan premiums will cost less and the individual benefits from it with no or elementary charges, this is same for any commodity that you buy in large quantities and always enjoy some discount or fair price on it. Most of the employees who want to increase their cover or want some add on plans apart from that offered by the organization pay their increased premiums individually, and rest of the employees do not have to worry about them. A lot of individuals working in organizations like these never purchase an Individual Insurance Policy because they feel that the policy benefit provided by the company is good enough or might simply not want an added extra expense every month.
  • Credit score: Credit score may play a vital role in the approval of your health insurance policy. If your credit score is not good, the insurance company may reject your application. On the other hand, in group health insurance policies, credit score plays no role. If your employer adds your name in the list of beneficiaries, you will get the cover.
  • Bonus on no claims: If you have an individual insurance policy, if you do not claim your policy throughout the duration of the policy, you automatically qualify for a bonus for no claims which are a reward for being healthy and cautious, this might be as a discounted premium or increment for no added on cost too. One significant disadvantage of group discount is that if one of the members claim the policy under any situation, the coverage for the individual of the group comes down unless the person wants to compensate for the premium cost on behalf of the whole group which is less likely to happen.
  • Coverage provided: If you have an individual insurance policy then you are covered as long as you set the policy terms, but if you have a group insurance policy then you are covered only till you are a part of the organization. The organization pays your premium. The day you resign or even retire, your group insurance policy ceases, you do get a chance to change the policy to individual one, but the premium costs are too high. Unless you opt for the new individual policy with higher premiums and new conditions, you lose the insurance coverage.

Group insurance plans are cost-effective for the organization and everyone working for it, but every individual must have an insurance policy of even the basic premiums also if their organization does not provide them with any insurance coverage. While the group policies are on the terms & requests made by the organization, the individual ones can be structured according to the requirement of the individual. It is very difficult to get a new insurance individual policy after retirement when you are more vulnerable to health problems. If you manage to get one, the coverage will be very less, and the premiums will be very expensive.