Life is most important to all of us, though in a lighter sense we only realise it only when we go to a hospital to meet someone or at a funeral. Medical advancement has increased average age of a person drastically, but nothing comes for free; this increase is due to the medical cost we now may put in to live longer & healthily. This high cost can be taken by a Health Insurance Policy.
People have now started to understand the value of having a Health Insurance, as it saves us from spending on big medical expenses which may seriously hamper our financial plans for future.
Mistake that people are still doing is that they are not evaluating correctly how much insurance they need. They are buying health insurance policy just to have one. Like we keep souvenirs.
While deciding to but a policy, you must consider the rising medical cost in a super specialty hospital & then decide the sum insured required considering inflation impact too.
Broadly there are two kinds of policy holders:
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Group Health Insurance Policy Holder (usually provided by an employer to its employees)
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Individual Health Insurance Policy Holder
The main objective of both kinds of policies is same i.e. to provide financial aid to the policy holder in case of medical emergency. But still there are few differences worth noticing & not to be avoided at any cost.
The main difference between Group Health Insurance Policy & Individual Health Insurance Policy are :
Risk Assessment / Underwriting
Individual Health Insurance Policy:
To decide whether one is eligible for a policy or not & what should be the premium, insurance company consider may parameters.
Insurance company may check if we have any pre-existing diseases, any hereditary diseases, current medical condition, kind of work we do, age etc. We may also be asked to undergo medical examination, if necessary. Based on all these criteria insurance company may decide to give us insurance or not. We may also be charged extra premium which is called as loading.
Group Health Insurance Policy :
In case of a group insurance policy, the insurer assesses risk of the group as a whole and not according to individual group member.
In case of group policy the insurer underwrites the case on the basis of the number of member in the group, work profile of the group members, location, average age etc.
There is no need to undergo medical examination & any pre-existing diseases are also covered from day 1.
Just to share with you if your company provides you with a family floater policy & there is an addition of any new family member ,like you get married or have a baby in between, always remember to inform your HR & cross check if the name has been added in the group policy.
Waiting Period
It is the time which is declared by the insurer in the policy document & up to which no claims will be accepted by the insurer. They usually range from 30 days to 48 months. All of the policies have a mandatory waiting period of 30 days except accidental claims.
Individual Health Insurance Policy
Apart from intial mandatory waiting period of 30 days except accidental claims there are other kinds of waiting period in an individual policy.
In case of maternity waiting period the waiting period ranges between 9 -36 months. For pre-existing diseases such as diabetes, high blood pressure, thyroid, ENT disorders, hernia, osteoporosis etc. there is a waiting period of 1 to 4 years. Hence, it is important to take health insurance policy early in life to avoid any waiting period.
Group Health Insurance Policy
The policy benefits usually starts from the day 1 & usually there are no long waiting periods even for the pre-existing diseases & maternity benefits. The policies are flexible to accommodate any claim sometimes by waiving any waiting period clause, if any, on an exception basis.
Policy Term
It means the period we choose initially while buying the policy to remain covered by the policy benefits. But we need to regularly pay the premium & renew the policy once it’s in force.
Individual Health Insurance Policy
Individual policies are valid till the time we pay premiums regularly & remain covered till the period we chose initially.
Group Health Insurance Policy
Group policy cover ceases to exist when you leave, change or retire from your job. Especially in the case where you leave or retire from your job it either becomes too tough or too costly to buy a health insurance plan.
With the growing age premiums increases, as you are more prone to get into some kind of ailment in near future. Moreover, you may even face denial by the insurance company for a health cover, due to your higher age and any sort of pre-existing medical ailment.
So you have to stay without health cover in the years when you will need it the most or if given then it would be on an awfully high premium. This is the worst part of a group health policy. We will discuss how to get over this problem in my next article. Stay tuned..
Customisation
Individual Health Insurance Policy
As you already know that insurance policies have many features which can be availed according to our need & benefit. These may include flexibility in policy tenure, sum assured, choice of policy, change of insurer under portability guidelines etc.
We can steer our policy whichever it best suits us.
Group Health Insurance Cover
All these benefits discussed above are available to your employer who is the proposer. They may change the sum assured, insurer etc according to their need, budgets & tax obligations.
You being an employee has no control over that.
No Claim Bonus
No claim bonus is the discount or benefit which is given to the policy holder for not filing any claim & keeping good health.
Individual Health Insurance Policy
These days rather than giving discount in premium, insurer increases the sum assured of individual policy holders by 5 – 10% annually that can accumulate maximum upto 50- 100% of the sum assured. It proves to be beneficial to the policy holder in case of bigger claims.
One more good thing if you opt to port your policy this enhanced cover (due to NCB) also gets transferred to the new insurer.
Group Health Insurance Policy
Under group health policy no such benefit is available & moreover if some of the group members raise higher claims than the expectation of the insurer than insurer may increase the premium or may reduce the sum assured for the group.
Insurance is based on risk, which is in turn based on a probability. If probability of a negative event increases, then risk increases & risk increases premium for the very same sum assured.
Tax Benefit
Individual Health Insurance Policy
Individual policy holder gets the tax benefit under sec 80D of Income Tax Act. 1961. A person can avail maximum taxable income deduction on a premium paid upto Rs 60000.
See the table below
[table id=19 /]
Group Health Insurance Policy
You cannot claim any tax benefit on your employer provided health plan & benefits can only be availed by your employer. You can only avail benefit if in case your employer is charging full or some part of premium from your salary.
I hope you would have by now able to understand the major differences between an employers provided health insurance plan & an individual health insurance plan.
Here what you must understand is:
- You must be adequately covered by an health insurance policy, as medical costs have inflated so much and a lower sum assured can eat up all your investments you are accumulating for your other life goals
- If you are having a health insurance policy provided by your employer, even then you must be having an individual personal health policy. It will keep your cover live when you retire or leave your job later in life & when you need it the most.
We will discuss which type of additional health cover a group insurance policy holder must opt for in our next article.
Do write in comments below, if anything you would like to know or want to be discussed in our coming articles.
Article was an eye opener & will surely look forward to have an individual health insurance policy cover other than my employer provided group insurance cover. But I would like to know about top-up health plans.
Thanks for the feedback Abhishek. Will surely post on Top-up plans in my next article