What are the pros and cons of buying a group health cover?

Consider the pros and cons of buying a group health insurance, before taking a decision.

"Alone we can do so little; together we can do so much." – Helen Keller. There is much truth behind this proverb, which also applies to buying a group health insurance policy. However, like every other financial decision, there are pros and cons. While one can obtain health cover for multiple members in a group with a single health plan, on the flip side, the premium costs can significantly increase in case of higher claims.

What are the pros and cons of buying a group health cover?

Buying a group health cover is a double-edged sword. While it is well known that there are distinct advantages in operating as a group like advantageous pricing from the negotiation of bulk discounts, there are associated disadvantages like spiralling of premium costs due to the inclusion of multiple members and resultant high claims. We shall explore the upside and downside of buying a group health cover so that you can weigh all the options carefully before zeroing on the best option.

Pros:

1. Cost savings: As the name suggests, since the group insurance policies include multiple members, it is natural that there is a decline in the cost of insurance per person. Accordingly, one is in a better position to negotiate favourable premiums and bulk discounts from the insurance company. The premium costs are economical in comparison to an individual health plan or a family floater plan. In some instances, the employers fully bear the premium costs, with no monetary outgo on part of the employees. Overall, group health plans enjoy enhanced affordability. 

2. Absence of a waiting period: Usually group health plans do not involve a waiting period and cover pre-existing diseases from day one itself.  This feature beats competition hands down! Even the standard family floater plan entails a waiting period of two to four years before the policy comes into effect. Additionally, one need not have to undergo medical check-ups in order to avail of this plan. Members suffering from chronic diseases or lifestyle illnesses like diabetes and hypertension are also eligible to opt for the group plan.  

3. Wide scope of coverage: A group insurance health policy extends protection against a wide range of diseases, including those medical conditions that the insured is already suffering from. Further, group health plans can be suitably customised as per the specific requirements and medical history of the group members.

Related: Group Health Insurance vs Individual Health Insurance

4. Comprehensive cover: Group medical plans extend to all members of the group and their dependents, without any exclusion based upon age group, risk profile or medical condition. Generally, buying an individual plan for the elderly involves higher premium costs. This is because as one ages one is more susceptible to certain health disorders. The insurance company compensates for the enhanced risk by charging a higher premium. However, the premiums applicable in group medical plans are independent of the age factor.

Cons:

1. Inadequate cover: Group insurance allows affordable access to health insurance for those unwilling to shell out extra money as premium payment towards the more expensive personal mediclaim policy. However, it might happen that the insured falls short of the required monetary amount in the long run, especially after retirement. Additionally, the group plan offered by the employer is available only as long one stays employed with the same organisation. One might lose the benefit of company-specific group health plans in the event of a job change. 

2. Escalation in renewal premium costs due to higher claim amounts: In case of instances of high monetary claims, the insurer may insist upon additional premium payment or cancel the group policy if it is financially unviable for the insurer.  In this scenario, one would have to pay a higher premium outlay or terminate the policy, resulting in loss of policy cover to the members.  

3. Lack of control over the policy terms by individual members: In a group health policy provided by the employer, the employees have limited power to customise the plan terms. The employer decision as regards the terms and conditions of the opted plan are final. Thus, it is best for the employee to opt for an individual medical plan to cater to special medical needs. Often group plans might exclude coverage for one’s elderly parents and in-laws. 

In conclusion, irrespective of whether one uses group medical insurance or feels that one has spent more towards premiums than the amount claimed, it is prudent that one stays well insured against sudden medical emergencies. With rising medical costs, increased susceptibility to medical illness due to stressful lifestyles, the emergence of nuclear families with limited budgets, a group insurance policy might be a good option than risk staying uninsured. In medical matters, better stay safe than sorry!

Having weighed the options, you might have decided to go for a group insurance policy. However, the story is not over yet! You might want to go through the features and exclusions from group health insurance policies before you decide upon the suitable plan.