What is the difference between Group health insurance & individual health insurance

Despite providing similar coverage, both individual and group health insurance plans differ in various aspects, and these differences are not very easy to understand. In fact, many people are unaware of the nuances of both these policies, which consequently, makes it difficult for them to pick what’s best for them. Particularly small businesses need to assess the need for group health insurance plans, both for tax and employee-benefit purposes. To define in simple terms, group insurance is simply an insurance package purchased by an organization for the benefit of its employees. The organization may design a self-insured plan itself or select a pre-planned insurance policy from an insurance company. On the other hand individual insurance is the insurance package bought by an individual for themselves, or for a group of people, such as his or her family. The following are some of the major differences between the two:


Group Health Insurance & Individual Health Insurance : Differences



group insurance plans cost less and can be availed at low or zero cost to the employees. Each individual employee will not have to bear any additional fees unless he/she opts for additional benefits that are otherwise not offered to the group. Also, while premiums for group plans are deducted from the salary, it is paid separately for individual plans.


Convenience and control:

On rare occasions, an individual may be denied the insurance package for a variety of reasons, be it medical or financial history. However, as far as group insurance packages are concerned, every employee of the company is eligible for the insurance package and is automatically granted approval for the insurance package. Since the process of underwriting, wherein the to-be insured’s medical history is closely examined, is sometime waived off for group insurance plans, it is much easier to obtain an insurance package through the organization. However, with regard to individual insurance packages, the individual is free to set the policy terms. The policy can be decided on the basis of only your personal medical, financial, and social situations.

No claim bonus:

as far as group policy is concerned, you, as an individual are not eligible for any benefit if you throughout the tenure of the policy. In contrast, with an individual insurance plan, you are eligible for a No Claim Bonus- which can be viewed as a reward for being healthy, and you can get it in the form of discounted renewal premium or incremental cover at no additional cost.



While individual insurance plans are applicable at all times, group plans are effective only during your years of employment with the particular organization. When you retire/resign, you can opt for converting the group cover to an individual policy. However, it should be noted that the conversion premium is generally much higher than that for a new individual life insurance policy. So, it is a prudent idea to convert only if the premium works out lower than a new policy or if you are otherwise un-insurable. If you choose to convert, you will be required to produce the certificate of coverage that your employer had given you under the group insurance policy.


Group health insurance vs. individual health insurance Which should you choose?

Group insurance plans can be very cost-saving for the company as well as the employee, which makes it a lucrative deal. That being said, affordable individual insurance packages are undeniably a necessity as they allow you to choose exactly what is covered and what is not. You have the power to decide which critical illnesses and diseases you want to cover, on the basis of your family’s and your medical history, how many members of your family you want to cover, and even how much sum you are assured. On the other hand, group insurance policies are framed according to the policies of the company and your employer’s will. Also, if you do not have an individual health cover, you may face difficulties to get one post-retirement, especially if you have developed any health issues. Even if you get covered by the best health insurance, you will invariably have to pay quite a high premium for the same.

For the above mentioned reasons, it is advisable to go for an individual health insurance cover even if you are covered under a group plan through your employer. Once you decide to go for an individual plan, make sure you do adequate research, obtain the best quotes and make comparisons. If necessary, you can also consult an expert.


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