The Differences in Group and Individual Health Insurance

No matter which type of policy you have it’s important to realize that it is always you and your family that is the insured party. However, group health insurance tends to be more popular simply because it is generally less expensive.

Group insurance allows for the risk to the health insurance company to be spread over a group. It also allows for more business to the company. These two things combined are generally the reason these policies are cheaper. Most group insurance policies don’t require a medical exam from policyholders because they believe the people in good health far outweigh those in poor health. Additionally, many group policies have special coverages that individual policyholders have a hard time obtaining and affording because of their purchasing power.

The benefits of group insurance include the pricing among other things. For instance larger groups often get larger discounts. Group policies also offer an effective way to cover a big portion of the population. They can offer more variety in products for medical needs to the members of the group. And these products can be customized. Finally, group insurance is more flexible and tends to provide more benefits.

Individual insurance on the other hand is a policy you get directly from an insurance company. Usually people that are self-employed opt for this coverage. Even though it is more expensive a bonus is that a significant percentage is tax-deductible.

Obtaining individual insurance is much harder than group insurance for more reasons than just the price. Generally, people seeking individual health insurance must fill out a health questionnaire as well as undergoing a medical exam. This helps provide evidence of insurability to providers. As an individual you can be denied insurance based on your personal habits (such as smoking), health, medical history, age, income and many other factors that bear on risk acceptance. Even if you are approved your policy may have plenty of limitations on its coverage.

The bottom line is that group insurance is almost always the best option. If you are self-employed check into your alumni association or even your credit card companies to see if any of them offer any type of group coverage. It should cost you less and offer you more. And that is really what’s important when you’re thinking about health insurance.