Group insurance schemes are mandated by the Government, it is one of the many benefits extended to the employees. Group insurance schemes for employees not only ensure to hedge the health risk in case of group insurance health plans but also provide a peace of mind that enables the employee to stay focussed on his work. Before we embark on the pros and cons of group insurance health plans, we understand the meaning of group insurance.
What is group insurance?
Any insurance policy which offers coverage to a group of members, typically employees of a company or members of a single organisation. Group insurance health plans provide coverage against health hazards including hospitalisation, critical illness, maternity coverage, COVID insurance etc.
The individual medical fitness of the employee is not assessed in the case of the group insurance, the premium paid across all the employees is the same for the same amount of coverage (unless the company enforces varied coverage amounts for different employee ranks).
Also, since group health plans are completely customizable, the employer can choose to add or delete features based on their requirements and premium. The risk pool for the insurance company is spread across a wide age group and hence, the relative risk assumed by the insurer is lower than insuring an individual. Thus the premiums for group insurance schemes are typically lower.
Pros of group insurance policies
- Lower premiums are one of the most important and prominent features of group insurance health plans. Typically, the group insurance policy premium is paid by the employer on behalf of the employee, thus making the plan free of charge in the hands of the employee.
- The waiting period which is usually applicable for individual policies does not apply to group insurance health policies, items like pre-existing diseases are usually covered from the first day of the policy.
- Often the group insurance scheme can be extended to your family members, provided they are dependents. Group health plans can be either Employee only, or Employee + Immediate dependents (such as spouse and 2 kids) or Employee + Immediate dependents + parents.
Thus, often Employee + dependent plans do offer benefits like maternity-related, and newborn baby health coverage is included as part of the group insurance health plans. - Most insurance companies have tie-ups with all prominent hospitals across the country, thereby ensuring that the settlement process is streamlined and cashless.
- Many of the group insurance policies also offer out-patient coverage, many of the medical conditions require out-patient treatment, hence this feature comes in handy for employees.
- Preventive health checkups and periodical screenings can also be covered to ensure that employees prevent illnesses. However, this is just an option and the company can choose to opt for it or not.
Cons of group insurance policies:
- Job uncertainty or sudden job loss could leave the employee with no health coverage.
- The employer has the power to choose the features of the coverage, there is no option for customisation, and items that are important for you may not be covered at all.
- Dependent cover could be restricted by the employer.
- Since the premium is often paid by the employer only, the coverage may seem sufficient as compared to the cost. But, medical expenses are the fastest-growing expense in the world. So, often group insurance coverage may seem insufficient.
- If the employer is paying the premium on your behalf, then you cannot claim tax benefit under section 80D of the Income Tax Act.
How to overcome the cons?
The only way in which you can overcome the disadvantages of group insurance health plans is by availing an individual plan for yourself and your family. Such a plan can be customized as per your needs, it can also come in handy when the medical expenses overshoot the permitted limit under your group insurance claims. You will have complete control over this plan and can look for plans which specifically cover certain illnesses which are needed in your case.
Albeit the waiting period, you will have coverage even when you transition jobs or take a break. The pandemic has emphasized how vulnerable we are to infectious diseases and how OPD benefits can be the need of the hour.
Most importantly, individual plans are offered with lifelong renewability clauses. So, if the specific health insurance plan is even discontinued, the insurer will have to provide another alternative plan for you to migrate to.
Further, the expenses incurred by individuals suffering from long covid are quite significant. The pandemic also brought to the fore that job security is questionable and the future of even the most promising jobs could be uncertain. Hence, it is pertinent to avail of an insurance policy that offers customized coverage for yourself and your family.
In a nutshell
Group insurance policies are indeed a blessing to the employee, it takes a lot of burdens away from their shoulders. However, you will require additional personal health insurance coverage to complement your group insurance scheme. Both put together will offer the most comprehensive coverage that one can hope for!
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