What is Group Health Insurance?

When working for a company, one of the benefits that you often receive is health insurance coverage through group health insurance. Many people rely on these plans as their primary source of health insurance coverage. But how exactly do these plans work? Are they sufficient to meet your healthcare needs?

In this article, let’s take a look at what group health insurance is, its advantages and disadvantages, and whether or not it should be your primary health coverage option.

What is Group Health Insurance?

Group health insurance is a type of health insurance that an organisation provides to its employees or members. The employer or organisation pays the premiums — either fully or partially — and in return, their employees are insured under a common, master health insurance policy.

Now, these plans don’t just stop with the employees. Usually, they also extend coverage to their family members, including spouses, children, and sometimes even parents. Some policies may also include wellness programs or additional perks, such as discounts on gym memberships and health checkups — nifty little incentives that sweeten the deal.

Traditionally, group health insurance is seen as a corporate benefit. Employers use it as a tool to ensure their employees' well-being and, in many cases, retain top talent. But there are other places where group insurance can crop up. Maybe you’re a member of a club, a loyal customer of a public-sector bank, or even an alumnus of a reputed institute—you might be offered a group health insurance policy in these cases, too.

Heads up: It takes an average person up to 5 hours to read and analyse a policy and 10 hours or more to compare different plans and make a decision.

This is why we propose a better alternative - taking a 30-minute FREE consultation with Ditto’s certified advisors. We have a spam-free guarantee, and we’ll never push you to buy a plan. Don’t delay this - we have limited slots daily, so book a quick call here before they run out.

But here’s the catch. Group health insurance policies aren’t customisable. What you see is what you get. If you’re looking for specific add-ons or tailored coverage, you're out of luck. That said, the trade-off here is usually the lower premiums, which make these policies more affordable than most individual health plans.

In the end, just like any other financial instrument, it boils down to a balancing act between the benefits and the limitations of group health insurance.

What are the Pros and Cons of Group Health Insurance?

While group health insurance has its fair share of advantages, there are also some limitations you need to be aware of. Let's take a look at them now.

What are the Advantages of Group Health Insurance?

Group health insurance offers a range of benefits that make it appealing, especially in terms of affordability and accessibility.

1. Lower Premiums: One of the most significant perks of group health insurance is the cost factor. Since the employer typically covers the premium — or a large chunk of it — employees get health insurance at a fraction of the cost they’d pay for an individual policy. This makes group insurance a more affordable option for those looking to save on health insurance premiums.
2. No Medical Underwriting: Unlike individual health insurance, where you may have to go through medical tests, group health insurance skips that step. This means employees with pre-existing conditions or health issues can still receive coverage without the hassle of being denied or facing higher premiums due to their medical history.
3. Coverage for Family Members: Group plans don’t just benefit employees — they often extend coverage to immediate family members such as spouses and children. Some plans even cover parents, which can be a huge advantage, especially if you’re supporting elderly parents and looking to save on the steep costs of individual health insurance for them.
4. Immediate Coverage: Another significant advantage is the immediate coverage group health insurance provides. Unlike individual health insurance plans that may impose waiting periods for pre-existing conditions, maternity care, or other benefits, most group insurance policies offer these benefits right from the beginning.

What are the Disadvantages of Group Health Insurance Policies?

It’s also important to recognise the limitations of group health insurance, particularly when it comes to flexibility and long-term coverage.

1. Ends with Employment: Group health insurance is tied to your employment, which means it will not cover you when you leave your job. If you quit, switch companies, or get laid off, the coverage ends, leaving you vulnerable until you find another job or opt for individual health insurance.
2. Basic Coverage: While group health insurance provides adequate coverage for most individuals, it may not be enough in severe cases. If you experience prolonged illnesses, require critical illness treatment, or face long-term hospitalisation, the sum insured under a group plan might fall short, forcing you to dip into your savings.
3. No Portability: Group health insurance isn’t portable, meaning you can’t use the policy with you if you leave the company/group. Unlike individual health insurance plans, where you can switch insurers or port benefits, you lose the coverage once you’re no longer part of the group.
4. Limited Customisation: While group health insurance can be affordable, it comes with a catch — you don’t have much say in the policy. The employer sets the benefits, and there’s little room for customisation. So, you may be out of luck if you need a specific type of coverage or rider. The most you can do is probably choose the cover amount.

Balancing these pros and cons is key to understanding whether group health insurance is the right fit for your needs.

That said, if you want to purchase a good health insurance plan that you can customise according to your needs, here are some policies you can consider.

Best Health Insurance Policies to Purchase in 2024

Before we take a look at the policies, let’s understand what we should look for in a good health insurance policy in 2024:

1. No co-payment, room rent limits, and disease-wise sub-limits.
2. A Low pre-existing disease waiting period (PED WP) and specific illness waiting period (SI WP).
3. A good restoration bonus, pre- and post-hospitalisation cover, network hospital list, and no-claim bonus are also added advantages.
4. Apart from these features in the policy, you should also consider some metrics that assess the insurer’s performance. These include the Incurred Claim Ratio (ICR) and the Claim Settlement Ratio (CSR).

Why Talk to Ditto for Your Health Insurance?

At Ditto, we’ve assisted over 3,00,000 customers with choosing the right insurance policy. Why customers like Sumit below love us:

✅No-Spam & No Salesmen

✅Rated 4.9/5 on Google Reviews by 5,000+ happy customers

✅Backed by Zerodha

✅100% Free Consultation

You can book a FREE consultation. Slots are running out, so make sure you book a call now!

Conclusion

Group health insurance is a convenient and cost-effective way for company employees or members of a group to receive basic health coverage. While it’s a valuable benefit, it’s important to analyse whether its coverage is enough for your specific needs.

This is why purchasing an individual health insurance policy and then supplementing that with a corporate or group health insurance policy is wise. This is true, especially for those with larger families, pre-existing conditions, or a need for more comprehensive coverage.

If you need help determining whether your group health insurance is sufficient, consider reaching out to a trusted insurance advisor to assess your options.