What is the difference between personal and group health insurance?
Until a few years ago, one had limited sources to buy health insurance from, as Insurers and their Agency channels were the only ones selling retail products. But, with the advent of new products, increasing internet penetration, rising customer awareness, the proliferation of many B2C eCommerce platforms, etc, there is an unprecedented rise in the number of intermediaries and sales channels that want to sell health insurance to the end consumer. While the choices are good for the consumer, it also leads to confusion. It is thus important that the customers do a good analysis of their requirements and also understand the type of product that they are buying.
Two broad types of health insurance products that we will discuss in this article are - personal health insurance & group health insurance. Before we dive deeper into these 2 types of products, let’s look at some examples of personal & group health insurance.
Banks, fintech apps such as Phonepe, Paytm, cab-hailing firms like Ola, Uber, Healthtech apps like BeatO, Fittr, HealthQuad, etc primarily sell group health insurance policies which are designed exclusively for their ecosystem - bank account holder or a mobile app user. Such group insurance schemes are usually linked to membership or a certain minimum threshold of service consumption/use.
On the other hand, aggregators like Policybazaar & Turtlemint primarily sell personal health insurance which can be bought by an individual for themselves and their family.
We’ll learn about personal & group health insurance in greater detail in this article.
Personal Health Insurance
A personal health insurance plan is usually a retail product whose features and pricing are filed with IRDA by the Insurer. Anybody who fits within the dimensions of minimum and maximum entry age can apply for such products. The Insurer can accept or decline your proposal based on their medical underwriting and financial underwriting norms. Such retail plans are available for individuals as well as their families as multi-individual and family floater health insurance. They are sold via the Insurer websites, Agency channels, Broker & web aggregator-run portals like Policybazaar, Turtlemint, Coverfox, etc.
Group Health Insurance
A Group health insurance exclusively covers members of a group. Nobody outside this closed-group ecosystem can be enrolled under its group health insurance. IRDA states that no group should be formed solely for the purpose of securing insurance - group covers can be given to members of an existing group who share a common affinity amongst them. Examples of groups could be - employees of an organization, account holders of a bank, members of a club, residents of society, registered users of a mobile app like Ola, Uber, PhonePe, BharatPe, etc.
The Insurer issues a master group policy in the name of the group administrator (your employer, the company whose service you are availing, the Resident Welfare Association, etc.) & all eligible members get a Certificate of Insurance in their names.
Enrolment under group health insurance is available through the mobile/web platform of the group policyholder and it can usually be bought by giving consent and providing a good health declaration. There are usually no pre-policy medical tests.
Group policies can be helpful for individuals who cannot get personal health insurance due to a variety of reasons. For example, senior citizens or people with pre-existing conditions might find it difficult to get individual health insurance or might have to shell out extremely high premiums. In such cases, group health insurance plans can help.
Sources of Group Health Insurance Plans
Here is a look at some of the common sources of group health insurance policies that you might come across -
- Corporate Insurance Plans: A lot of companies offer group health insurance to their employees. In some cases, the group health covers are extended to the family members of employees as well. Such schemes are linked to employment.
- Insurance offered by Banks: Some banks provide customized health insurance policies to their account holders, depositors, or borrowers. They can be a good option for those who can’t get personal health insurance in the open retail market due to adverse health status or age restrictions.
- Micro policies sold by other platforms: Insurance policies are also sold by platforms like online travel agents, e-commerce platforms, or app-based cab companies while you are buying some other product. For instance, app-based cab companies - Uber and Ola have started providing Personal Accident insurance cover for the duration of rides. While Uber offers free insurance, Ola charges as little as INR 1 for daily rides.
Who Pays for Group Health Insurance?
Both are possible - paid by the group policyholder & paid by the member. More often than not, the employer-provided group covers are paid for by your Company & other group schemes (those run by Banks, E-commerce firms, etc) are member paid. Occasionally, banks & other fintech firms also come up with complimentary insurance offers for their premium customers linked to their consumption, tenure, etc. Similarly, some employers may ask the employees to pay for their group health covers, especially for coverage of parents and for higher Sum Insured limits above a certain basic threshold.
What are the differences between Personal and Group Health Insurance?
Let’s look at the snapshot of differences between a group and a personal health plan.
|Personal Health Insurance||Group Health Insurance|
|Control over the policy||You have full control over the policy. You can opt for the features and benefits of your choice.||You have little or no control over the policy features as the policy will be controlled by the group’s owner.|
|Premiums||The premiums may vary depending on the underwriting. They are generally expensive compared to group plans.||Premiums of a group plan are comparatively cheaper than personal policies.|
|Proposal forms, declarations||Personal health insurance policies require detailed proposal forms to be filled.||Very little documentation is needed. Issuance is based on consent & good health declaration.|
|Medical tests||Medical check-ups are often required for personal plans especially for ages above 45 years and Sum Insured above INR 25 lacs, or if users declare a medical condition in the proposal form. A few insurers request telemedical tests irrespective of declarations made.||You don’t need to undergo any medical tests for group policies. Issuance is based on a good health declaration.|
|Issuance||Issuance is post detailed proposal form & required physical/ telemedical tests. While you can download a softcopy of the policy document immediately, hardcopy delivery (where available) may take up to 7 days after payment.||The policy is issued instantly effective the date of opt-in & delivered to the member’s mailbox within 24-48 hours.|
|Coverage||The cover continues as long as you keep on renewing the plan without any breaks.||The insurance is linked to your membership with the group. It stops as soon as you leave the group.|
|Policy Cancellation/ Discontinuation||The decision of canceling or discontinuing the policy rests with you.||The group owner can choose to withdraw or cancel the insurance scheme altogether.|
|Pre-existing Diseases||Pre-existing diseases are covered after the completion of the waiting period.||Mostly, pre-existing diseases are covered from day 1.|
|Tax Benefits||You can enjoy tax benefits under Sec. 80D of the Insurance Act.||You don’t get any tax benefits if the premium is paid by the group policyholder. However, if you are paying the premiums for a group policy from your pocket, you can get tax benefits under 80D.|
What’s the Beshak Recommendation?
Buy a good personal health plan for yourself and your family to ensure that you’re adequately covered and have full control over the policy coverages. Do not get carried away by online platforms that promise to offer you health cover at a low cost, quickly - these plans have a lot of flipsides and might be very restrictive. So, invest in these policies only as a last resort - if you’re finding it difficult to get a policy elsewhere due to age or health-related issues.
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- Earlier, health insurance policies were sold only by insurance companies and agents. But now, banks, e-commerce sites, cab-based app companies, and many other online platforms have started selling health policies.
- Policies sold by these platforms are usually group plans and the policy features, benefits, and limitations are very different from personal plans.
- A group plan covers a group of people under one single plan whereas a personal policy is something that you can purchase for yourself and your family as an individual policy or a family floater.
- You have full control over the policy customizations and negotiations of a personal health policy and the decision of continuing or discontinuing the cover rests with you.
- In group plans, however, you have little or no control over the policy features and negotiations, and the coverage is linked to your membership - it will stop as soon as you leave the group.
- Premiums of a personal policy depend on the underwriting and are usually more expensive than a group plan.
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