While the importance of health insurance is well-known, several people make the mistake of not buying a standalone health insurance plan if they are covered under a group policy. In other words, if they receive coverage under a group health insurance policy provided by their employers, they don’t bother buying a separate plan for themselves.
While a group health plan undoubtedly has benefits, it makes sense to have a standalone health insurance policy in your portfolio. This article will look into several aspects of standalone and group health insurance plans that will help you make the choice for yourself.
As the name suggests, group health insurance provides coverage to a group of people. In other words, the cover is distributed among members of the group. Generally, employers buy group health insurance plans for their employees.
It is an employee benefit measure that seeks to enhance employee retention and boost their morale, establishing organisations as entities who care for their workforce.
An individual or standalone health insurance plan is one that you buy for yourself. You bear the entire premium and are eligible to receive coverage as per the plan’s terms and conditions.
No other member or individual can seek benefit from your plan. In other words, this plan belongs exclusively to you.
There are several differences between group health insurance and standalone health insurance plan. The table given below captures them, based on various parameters:
|
Parameters |
Group Health Insurance |
Individual Health Insurance |
|
Coverage Nature |
Distributed among all members of the group |
Restricted to one person |
|
Premium Bearer |
The organisation or employer offering the plan |
The person buying the plan |
|
Cover Tenure |
Till the time you are employed with the company |
As long as you renew it, irrespective of your employment status |
|
Customisation on Offer |
No |
Yes |
|
In Control Of |
The employer |
You can control it as per your needs |
The biggest limitation of a group plan is that you can’t tailor it as per your needs and the employer can withdraw at any moment. Also, in some cases, if deemed, the coverage amount may be reduced.
However, note that with individual insurance, pre-existing diseases will have a waiting period. This is waived off in a group plan. Also, you might need to undergo medical check-ups that are generally not asked for in a group policy.
Having said that, there are some major benefits of having an individual health insurance plan despite being covered under a group plan and they are:
As coverage in group health plans is distributed among all the members, it’s generally low. Given the rise in medical inflation and costs over the years, the coverage provided under a group plan may not suffice when you are hospitalised, and you may end up paying from your pocket.
However, things are quite different when you have a standalone health insurance plan in your portfolio. The expenses incurred beyond the coverage offered by a group plan are fulfilled through the individual policy, and you don’t have to dip into your savings.
Health insurance needs differ across individuals. Hence, it’s essential to customise it as per your needs. Group insurance plans don’t provide this flexibility. To simply put, you can’t mould it as per your actual requirements.
However, when you buy an individual health plan, you can easily customise it to suit your needs. You can choose the sum assured, add-riders and opt for convenient co-pay and sub-limit clauses, among others. You have complete control over your policy and can add or delete members if required. Not all these are possible with a group plan, where the entire control is in the employer's hands.
When you have an individual policy, for every year, you don’t make a claim the insurer offers NCB benefit. This, on most occasions, is through an increased sum assured up to a certain percentage keeping premiums the same. An increased sum assured helps fight medical inflation to some extent.
However, more often than not, group health plans don’t offer the benefit of NCB. Even if you don’t make any claim in any year, the amount of coverage remains the same year after year. Thus, you run the chance of falling prey to medical inflation.
You remain covered under a group insurance plan only till the time you are employed with the company. Once you leave, the cover ceases to exist. This leaves you and your finances in a vulnerable state. Also, it can be a difficult proposition to buy health insurance when you are aged as the body is susceptible to various ailments and you may develop pre-existing ailments.
Also, premiums increase with age and even if you end up buying a policy, it may come with strict terms and conditions. However, if you buy a standalone health plan early, you remain covered and don’t have to undergo the hardships of buying a plan at a later stage.
At the same time, there’s always a chance that employers may withdraw the benefits of a group health plan or opt for a variant with reduced benefits. In such a scenario, having a standard health insurance plan in your portfolio fills the void.
All the reasons mentioned above make it essential to buy a standalone health insurance plan even if you are covered under your employer’s policy. Not only it accentuates coverage but also ensures you remain guarded at critical milestones and events of your life.
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