What Is The Difference Between Group Health Insurance And Individual Coverage?

by SMCIB on Thursday, 15 December 2022

What Is The Difference Between Group Health Insurance And Individual Coverage?

The primary purpose of health insurance is to provide financial relief in times of dire medical need. As important as it is to purchase a health insurance policy for you and your family, it is equally important to select the right type of plan.

Today, there are many products available in the market. Two popular plans are group health insurance and individual health insurance. In case you are covered by a group health insurance plan, like corporate health insurance, you might think that there’s no need for you to opt for an individual health plan. But, that’s not true.

Though both plans have a common purpose - to provide you with financial aid in times of medical need, they differ in a lot of ways.

We'll compare both of these plans to help you make a well-informed decision - in this article. ?

What Is Individual Health Insurance?

An individual health insurance policy covers only one person. In other words, if you purchase an individual health insurance policy for yourself, you are the only person who can claim hospitalisation expenses.

How Does An Individual Health Insurance Plan Work?

An individual health insurance policy is essentially a contract between you and the insurer under which the insurer agrees to cover your medical expenses according to your chosen sum insured and the terms and conditions of your policy in exchange for regular premium payments.

Example: Mahesh buys a health insurance policy with a sum insured of Rs 15 lakhs. After a few months, he gets diagnosed with acute appendicitis and requires surgery for which he will be hospitalised. The surgery costs around Rs 3 lakhs. The insurer will pay for his hospitalisation expenses in accordance with the policy terms and conditions. In this case, they will cover the hospital bill of Rs 3 lakhs and the sum insured will be reduced to Rs 12 lakhs for the remaining period of the policy.


What Is Group Health Insurance?

Group health insurance covers only members of a group. It cannot be owned by anyone outside of this closed group.

The IRDAI specifies that no group should be formed just for the sake of buying insurance. It can only be obtained by members of existing groups who share a common interest. These include -

  1. The employees of an organisation
  2. Account holders of a bank
  3. Members of a club
  4. Residents in society, etc.

How Does Group Health Insurance Work?

  1. A master group policy is issued by the insurer to the group administrator - your employer, the company that provides the service you are using, or the Resident Welfare Association (NGO), bank etc.
  2. The group administrator pays the premiums and offers coverage to all members of the group. A certificate of insurance is issued to each member of the group.
  3. In order to enrol in group health insurance, you must give consent and provide a medical declaration stating good health - pre-policy medical tests are usually not required.

Example: Joey joined an MNC recently. His company offers a wide range of employee benefits, including coverage under their group health insurance policy. In order to enrol Joey in the policy, the employer required his consent and a health declaration stating good health.

Now, Let’s Compare Both These Plans -


Individual Health Insurance

Group Health Insurance


The premiums may vary, depending on underwriting, The cost of these plans is generally higher than that of group plans.

You pay the premiums under an individual health insurance policy.

Compared to individual policies, group plans have lower premiums.

Generally, the group administrator pays the premiums. However, you may have to pay full or partial premiums in some cases.

Proposal Forms & Declarations

A detailed proposal form must be filled out for individual health insurance policies.

Group plans involve less documentation. Basically, proper consent and a good health declaration are required for the policy to be approved.


You are covered as long as you keep renewing the plan and make timely premium payments.

The insurance is tied to the group membership. You will no longer receive benefits once you leave the group.

Control Over policy

This policy is completely under your control. Features and benefits can be chosen according to your preferences.

Policy features will be determined by the owner of the group. Therefore, you will have little or no control over the policy.

Medical Tests

In individual health insurance plans, medical checks are often required if -

  1. you are older than 45
  2. the sum insured is more than INR 25 lakhs
  3. you declare a medical condition in your proposal.

Some insurers demand telemedical tests regardless of declarations.

Group policies do not necessitate any medical tests. The certificate is issued based on a good health declaration.

Pre-Existing Diseases

You will have to serve a waiting period for pre-existing diseases.

Most of the policies cover pre-existing conditions from day 1.

Policy Issuance

Policy issuance is subject to the completion of a detailed proposal form and any physical or telemedical tests. Soft copies of the policy are available immediately, but hard copies may take up to 7 days to arrive.

Members receive their policy within 24-48 hours of opting for it and it takes effect right away.

Policy Cancellation/ Discontinuation

Cancelling or discontinuing the policy is your decision.

Group owners can withdraw or cancel the insurance scheme at any time.

Tax Benefits

You can receive tax benefits on the premiums you pay every year under Section 80D of the Insurance Act.

If the group policyholder pays the premium, you do not get any tax benefits.
If you pay full or even partial premiums for a group policy out of your own pocket, you can claim tax benefits under section 80D.


Wrapping up!

Both group health insurance and individual health insurance offer financial protection in case of medical emergencies. And, both of these have their own set of benefits and drawbacks. Hence, you need to carefully choose the right plan based on your specific needs.

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