The Biggest Problem With Group Health Insurance

by SMCIB on Thursday, 08 December 2022

The Biggest Problem With Group Health Insurance

Being a part of a group or a member of an organisation entails its own set of perks. One of the lesser-known benefits is that such memberships enable you to insure your health as well - by offering group health insurance policies. There are many benefits to group health insurance policies, including low premiums, little paperwork, no medical tests, etc. However, there are some downsides too.

We'll discuss them in this article -

What is A Group Health Insurance Policy?

A group health insurance policy offers cover to a group of individuals who share a common objective or relationship with the group owner.

A lot of corporate companies offer group health insurance policies to their employees. Group health coverage is sometimes extended to family members of employees as well. Some banks provide health insurance policies to their account holders, depositors, or borrowers. And, so on. 

Under this policy, the master policyholder, i.e., the employer, bank, etc. pays the premiums and offers coverage to all members of the group, i.e., the employees, account holders, etc.

Downsides Of Group Health Insurance Policy

Here are some of the cons of a group health insurance policy -

  1. Ends When You Leave The Group
    You can enjoy the benefits of the policy only until you're part of a group. You lose coverage once your relationship with the group ends.
    For example, say you own a corporate health insurance policy. In case you are laid off by your employer or choose to leave the company, then you'll no longer be covered under the policy. In the same way, your bank group health insurance policy may end if you decide to close your bank account.
  2. No Comprehensive Coverage
    Group plans will not offer you all-inclusive coverage, i.e., it won’t align with what you need. The features and cover amount picked by the master policyholder will be determined according to their budget and not your specific needs and requirements.
  3. No Control Over Policy
    Since the master policyholder who runs the group is in charge of the policy, you can't customise it to your liking or change the terms and conditions. The group might choose to curb its expenditures in the future or focus on increasing profits. In this case, they may choose to compromise on features/benefits. And, they’ll be less bothered about providing a cover that would serve your needs.
  4. Terms May Change During Renewal
    As of now, all group health insurance policies are one-year contracts. This means they need to be renewed every year. So, when the insurance company renews these policies, it can adjust pricing and terms in response to the claims they receive from this group. And, you may not find the updated terms satisfactory at times.
  5. Service May Not Be Satisfactory
    A group health insurance policy is facilitated by a group that does not specialise in the insurance business or claims handling. They might not get involved to understand how policies or claims work. Due to this, you may have to deal with hassles during claims - since you didn't choose your health insurance policy. In several instances, group health insurance policies were found to have poor service quality.
  6. The Policy Could Be Revoked
    There is always the risk that the policy could be discontinued or withdrawn at any moment if there is some sort of disagreement between both parties,i.e., the insurer and the group. If that happens, you’ll be left without cover in some cases - however, please note that in such a case the insurance company must migrate you to an individual or retail policy.

Wrapping up!

A group health insurance policy enables an organisation to include a group of members under the umbrella of a single policy. It can act as a cushion in case of medical emergencies, but it is recommended that you have a more tailored personal health insurance policy in place - so that no matter what happens, you are always covered.

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