Group Health vs Retail Health Insurance

Mon 12 Nov 2018 00:00:00 UTC

Group Health vs Retail Health Insurance

Group health vs Individual health insurance

Business owners often ask us why group health insurance is better than individual health insurance. This article explores the main differences between the two and their pros and cons.

Group health insurance, or Employee Mediclaim Insurance is by far the most common business insurance taken today.

Group health cover is taken for employees of a company and their dependants. All employees need to be covered, although in some cases exceptions are made if selection is on a designation basis.

Individual health insurance is insurance taken by individuals to cover themselves and their families.

There are a few key differences between group health cover and individual health cover.Below are the 3 major ones:

Waiting periods

A major difference between group and individual health insurance is waiting periods. There are three waiting periods that are important and are included in individual health covers but not in group health covers.

The first of these is a waiting period for pre-existing conditions. An individual health cover doesn’t cover pre-existing conditions for 4 years. This means you have to pay premiums for four years(without a break in cover) before pre-existing conditions are covered.

There is also a 2 year waiting period for specific conditions. These conditions might vary from insurer to insurer, but largely stay the same, as listed below:

  1. Any types of gastric or duodenal ulcers,
  2. Cataract
  3. Benign prostatic hypertrophy
  4. Hernia of all types and Hydrocele
  5. All types of sinus issues
  6. Fistulae
  7. Haemorrhoids
  8. Fissure in ano
  9. Dysfunctional uterine bleeding
  10. Fibromyoma
  11. Endometriosis
  12. Hysterectomy
  13. Stones in the urinary and biliary systems
  14. Surgery for any skin ailment
  15. Surgery on ears/tonsils/adenoids/paranasal sinuses
  16. Surgery on all internal or external tumours/ cysts/ nodules/polyps of any kind including breast lumps( however cancer or Malignant tumor/growth are covered)

There might be additions to this list depending on insurer.

The third waiting period is known as a kick in period. An individual health cover effectively begins 30 days after the policy is issued(hospitalisation due to accident is covered from day 1). In industry jargon, these three waiting periods are often referred to as section 4.1, 4.2 and 4.3; especially among public sector companies.

Group health cover, has an option(exercised in 90% of policies) to waive these waiting periods. Individual health policies have no such option, as of this writing.

There are also waiting periods in retail health insurance for maternity and new born children. Infants aren’t covered until they are 90 days old(16 in some policies like Star comprehensive). Maternity, if not outright excluded, is covered only after a waiting period of 9 months(basically, existing pregnancies are not covered).

Group health cover had an option to remove waiting periods for maternity and newborn babies, and almost always cover maternity by default.

No pre medical screening

When taking an individual health policy, the insurer may decide to conduct a pre-screening medical, which is basically a health check-up to help them decide whether, or for how much, they can insure you. So, based on the medical results, you may receive a higher premium than initially quoted, limitations on coverage, or you might find your risk declined altogether by the insurer!

Insurers set mandatory medical tests for people above a certain age(could be as low as 40), people wanting high sum insured policies(could be as low as a 5 lakh sum insured), and for people who declare pre-existing conditions. Apart from this, many insurers also have random sampling, where 1 out of every hundred or so non-medical cases is tested.

This is something that only exists in individual health policies. Group health policies have no pre medical screening or underwriting rejections; so long as all the employees are insured, the insurer accepts all lives.

Dependant inclusions

A retail health policy has floater options, where you can add your dependants. However, you can only cover your spouse and kids, or cover your parents. If you want spouse, kids and parents covered, you will be forced to take 2 policies. This can cause confusion, especially because both policies may be with different insurers, and even if they aren’t, the terms of coverage are generally different for older people, as insurers don’t provide as many benefits for older people.

Group health cover can include 3 generations in one cover(parents, yourself & spouse, children) and provides the same benefits to all of them.

A disadvantage of group health cover is that often employees don’t have a say in what the terms of the cover are, and in come cases, that cover may not be of a sufficient sum insured. This is where super top-up plans come in, complementing your group health insurance with a cover with high sum insured and high deductible.

There are many benefits that can be added to a group cover if you wish it, such as annual check-ups(most retail policies only offer biannual, that too only if you don’t make a claim), OPD cover(out patient treatment cover) critical illness, disability, etc.

If you wish to know more about managing health insurance for your organisation or how to customise your policy, contact us below!