As medical treatment costs are at an all time high, the rising medical inflation requires financial cushion to tackle them. Health insurance plans are an effective to manage these expensive treatments. Individual insurance covers and group insurance plans are two such offerings that are widely available. This article discuses the latter option, a group health insurance, its pros and cons helping you understand it better.
What are group insurance policies and how do they work?
Group covers are those health insurance policies that extend to a group of individuals. These individuals may either be a part of an organisation or even the subscribers to a product or service of an entity like subscribers of a credit card, savings account, cultural association and the like. All these so-called groups must be formed under the guidelines issued by the Insurance Regulatory and Development Authority of India (IRDAI). However, a group insurance plan is most popular in a corporate set up. Employers offer such group coverage as a perquisite in addition to the remuneration benefits. You can visit the official website of IRDAI for further details.
For the working of a group insurance plan, a master policy is issued that covers all the subscribers or members of the group. This master policy defines the amount of coverage for each member which is same. Further, individual subscribers can choose to increase such coverage using top-up covers. The terms and conditions, inclusions and the exclusions for all such members is the same. Here are some advantages and disadvantages when it comes to a group insurance policy:
Advantages of a group insurance plan
- Waiting period: Waiver of waiting period is the primary advantage of a group insurance policy. A standard health insurance policy has waiting periods that range between 12 months to 48 months based on the policy term. These include even the waiting period for pre-existing ailments. For group covers, there is no waiting period and policy coverage begins from day one.
- Coverage for pre-existing conditions: Another advantage of a group insurance cover is the coverage for pre-existing conditions. While other insurance plans may or may not cover such pre-existing ailments, a group cover ensures coverage from the first day even for already existing ailments.
- No medical check-up: Medical check-up is a common requirement when buying health insurance plans but not for a group insurance cover. No medical screening is required even for senior citizens.
- Burden of premium: Since group plans are offered in addition to the salary benefits in a corporate set-up, the burden of premium rests on the employer in some cases. In few others, the responsibility is jointly shared covering the employee while any additional member is required to be paid for from your own pocket.
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Disadvantages of a group insurance plan
- Limited sum assured: The sum assured for group insurance policies are limited. Considering the treatment costs of different ailments, such limited coverage ill often be insufficient. Hence, it limits the amount of coverage of a policy.
- Co-payment requirement: Co-payment clause requires you, the policyholder, to pay a specified percentage of amount of the claim. This increases the out-of-pocket expense despite having an insurance cover.
- Capping on expenses: When you compare health insurance plans, group policies have a capping on the room rent. Such capping limits the scope of a policy to compensate for the expenses incurred during the treatment thus requiring you to pay from your pocket.
- Limited tenure: A major downside on relying extensively on a group insurance cover is the limited coverage it offers in terms of tenure. Only till the time you are associated with that organisation, the policy coverage is available. Any change in your job or retirement will leave you without an insurance coverage.
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With the pros and cons of a group insurance plan laid before you, it is for you to decide which policy to choose. But before that, make sure you understand what is health insurance and the available plans that will help you seek the right coverage. Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read sales brochure/policy wording carefully before concluding a sale.