Everything You Need To Know About Group Health Insurance Policy

by SMCIB on Monday, 19 February 2024

Everything You Need To Know About Group Health Insurance Policy

What’s worse than falling sick? The medical bill, ugh! ?Did you know that Indians pay 78% of medical expenses from their own pocket?

A health insurance plan is a shining knight in armour against both these unfortunate happenings - the falling sick and the jarring medical bill. With the increasing costs of medical treatments and medicines, it is crucial to get yourself covered under health insurance.

One of the easiest and most cost-effective ways to ensure health coverage for yourself is checking for such schemes with your employer, bank, residential society, etc. These bodies often offer group health insurance plans that cover the members of that particular group.

So, what is a group health insurance plan? What are the various types of group plans available in the market? Are there any drawbacks?

Let’s see - in this article!

What Is Group Health Insurance?

A group health insurance policy covers members of a group under a single cover.IRDAI has stated explicitly that the sole purpose of the group should not be to buy insurance. Coverage is offered to members of a group who share the same affinity. A few examples are:

  1. Employers offering group insurance to their employees
  2. Banks providing group insurance to their account holders
  3. Members of a welfare club being covered under group insurance, etc.

How does Group Health Insurance work?

In a group health insurance policy, the master policyholder (employer, bank, or organisation) manages the policy. They issue the policy to the eligible policy members who then get a certificate of insurance in their name. Interested members will have to give their consent and ensure that they’re healthy.

Group health insurance policies do not usually require pre-policy medical tests. They are recommended for people who find it hard to buy an individual health policy. For example, senior citizens and people diagnosed with pre-existing medical conditions are sometimes denied policy coverage or are expected to pay higher premiums. In such cases, a group health insurance policy can be of great help.

Types of Group Health Insurance
There are many types of group health insurance policies that insurance providers offer. Let us discuss what they are:

?Employer-Employee insurance
An employer can add you to the company’s group insurance policy when you join the company. The policy stays active until you are employed in the company.

?Insurance offered by Banks to their Customers
Sometimes, banks take the initiative to offer group insurance policies to their account holders, depositors, borrowers, etc. The policy stays active until you have an account with the registered bank.

?Insurance offered by Association to its Members
Sometimes different associations offer group insurance policies to their group members. For example, a Resident Welfare Association can offer this policy to all its residents.

?Micro policies
Travel platforms, app-based cab companies, ticket portals, etc. sometimes offer small policies to their customers when they travel.  For example, when you book a bus ticket online, you can see that there is an option for you to insure your ride at meagre rates.

Let’s now discuss who pays for such policies.

Who pays for Group Health insurance?

Group health insurance policies are either paid by the master policyholder or the members, depending on the circumstances.

  1. Policies offered by employers and organisations are mostly paid by the master policyholder. In cases of higher sum insured limits above a certain basic threshold or the inclusion of parents, your employer can expect you to pay for the policy.
  2. Group schemes provided by banks and e-commerce firms are paid for by their members. They might offer their premium customers a few complimentary offers that are linked to their consumption, tenure, etc. 

Is it beneficial to be a part of a group health insurance policy? Let’s discuss this further!

What are the advantages of Group Health insurance?

Group health insurance policies have various reasons for you to say a big “Yes” to them!

1. Speedy issuance
Generally, you can receive these policies in less or no time at all. In most cases, they are issued within 24 hours.

2. Less documentation
There is not much paperwork involved, and the entire process can be seamlessly carried out online.

3. Affordable
The premiums of group plans are cheaper than a standard health insurance policy. This is because the risk coverage is spread across a large pool of people.

4. No medical screenings
Insurers usually do not insist on a pre-policy medical checkup for group health plans.

5. Additional benefits
As a pool cover for a bulk group, insurers offer additional and special benefits that otherwise would not be available to an individual health insurance policyholder.

6. No waiting period for pre-existing diseases
A pre-existing disease is any illness or disease that is diagnosed or treated up to 4 years before an insurance policy is issued. Under a group health insurance policy, pre-existing diseases are covered from day one.

Now that we have a clear idea of group health insurance policy benefits, let us also learn about its drawbacks.



What are the drawbacks of a Group Health insurance policy?

1. You do not have control
As the master policyholder makes negotiations with the insurer, you will have limited or no control over the policy. You cannot change the terms or customisations of the policy, all these aspects will be decided by the master policyholder. There also might be chances that the pricing or features associated with the policy change without you having a say in it. So, essentially, you may not get the cover amount and benefits that you actually need.

2. Linked to your membership
The policy offers coverage only until you are a member of the group. When you leave the group, the insurance policy ceases to cover you. For instance, your employer's health insurance plan will stop covering you if you quit your job or if you retire.

3. Yearly contracts
All group insurance policies are one-year contracts. Every year the pricing, terms, and premiums can be revised based on the claims the insurer received from the group for the past year.

4. Policy Withdrawal
As the negotiations take place between the group and the insurer, there is a higher risk of your policy getting withdrawn at short or no notice. There are chances that you might be left without coverage because of differences between the insurer and the group. In case such an incident takes place, the insurer is required to migrate you to another retail or personal insurance policy.

How to identify if you have a group policy?

There are some quick checks you conduct to know if you are a part of a group health insurance policy -

  1. Check the T&Cs of the policy, you’ll usually see the word ‘group’ mentioned.
  2. Check the policy document, you’ll find the words ‘certificate of insurance’ at the top and there will also be a ‘master policy number’ that belongs to the group.

We come to the end of the article. We hope you have now gained enough clarity on how group health insurance policies work and their types, benefits, and drawbacks.

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