Pros and cons of group health insurance

Know in detail the advantages and drawbacks of group health insurance policies. Check plans and buy them online.
3 min

Group health insurance refers to a health insurance policy provided by employers to cover the healthcare costs of their employees and often their dependents. It is an essential employee benefit that can provide affordable access to high-quality healthcare services. However, like any other type of health insurance, group health insurance comes with its own set of pros and cons.

But before we dive into the pros and cons of group health insurance, let us read about what group health insurance mean.

Group health insurance: Overview

A group health insurance policy provides coverage for the medical expenses of all the individuals included in the group. Generally, companies, corporates, or organisations buy a group health insurance plan for their employees or members. The companies offer medical insurance policies as an employee benefit. Policy owners pay a single premium towards the health insurance policy and keep renewing the policy with time. In some cases, organisations pay more than 50 per cent premium, while the remaining portion gets deducted from the employee’s salary. Both employee and employer then get the tax benefit against this health insurance.

9 pros of group health insurance policy

Here are the advantages of group health insurance that benefit both employees and employers.

Less employee turnover

Employees feel valued when the organisation puts their well-being first. Also, the assurance that their loved ones have a financial backup in case of emergency gives them peace of mind. This motivates them to work harder and focus on their work growth. It also reduced the chances of employees leaving the organisation.

Tax benefits

You get tax benefits on the group health insurance policy. The company can reduce their taxable income if it purchases this policy for its employees.

Lower premiums

Group health insurance policy comes at a lower premium. As a company includes several members under one health care policy, it has the option to negotiate the premium price.

Effective CSR policy

Providing effective employee benefits and security falls under the organisation's corporate social responsibilities (CSR). It gives a positive impression about the company in the market.

Covers medical expenses of all employees

Employees get coverage for treatment and hospitalisation costs. They also get coverage for expenses of the ambulance, medicines costs, doctor's fees, etc. as specified in the policy.

Cashless claim at network hospitals

Employees can get cashless treatment(through cashless health insurance) at any of the insurer’s network hospitals. Here the employee only needs to get admitted or treated without having to pay the hospital directly. The insurer will settle the bills directly with the hospital.

Medical coverage for dependents

Many group health insurance policies cover employees’ dependent family members, including children, spouses, and parents.

Add-on benefits

Policyholders can also include several add-on benefits, such as maternity cover and pre-existing diseases cover under the policy.

Offers some flexibility

The policy owner can choose the policy term according to the requirements of the group members.

Read on to know the pros and cons of group insurance policy for employees.

Cons of group health insurance policy

Know the disadvantages of group health insurance plans.

Lack of flexibility

Employees do not enjoy much freedom in a group health insurance policy. As an organisation maintains this policy, individual employees cannot customise it according to their preferences. For example, they have no option to increase their sum insured or avail of add-on benefits if they want to. You get add-on benefits only if the company opts for them.

Inadequate coverage

The coverage amount employees get usually does not suffice the treatment costs at renowned hospitals, especially in metro cities. Individuals may have to pay from their pocket if required.

Discontinuation of coverage

The group health insurance policy will discontinue if you leave the company. This means you are no longer covered under any health insurance policy. Therefore, you can claim for any health insurance benefits under this plan.

Delay in claim

Claim process under this insurance type may take some time. Delaying the claim settlement, and hence you may receive the compensation late.

Not helpful for personal financial planning

Employee health insurance is a group policy offered by the employer. The coverage offered under this policy may not be sufficient. An individual health insurance is a better choice to make for personal financial investment.

Considering the above factors, you can also opt for a separate health insurance policy along with the group health insurance policy. It is advised one should have additional health insurance to stay fully covered during medical emergencies.

Alternatives to employer-sponsored group health insurance policy

You can opt for the below health insurance policies to secure yourself and your family.

Individual health insurance

You can buy an individual health insurance plan with comprehensive coverage for hospitalisation and other medical-related expenses. You have the flexibility to customise the policy as per your needs. You can avail of add-on covers like hospital cash cover, personal accident cover, critical illness cover, etc.

Family health insurance policy

You can also opt for family health insurance, wherein all the family members get covered under one plan. The sum insured under this plan gets shared among the members. So, whoever falls sick or in case of a medical emergency can claim the benefits. You can also customise this health insurance policy, and increase the sum insured if required.

In conclusion, group health insurance is an excellent option for employers looking to offer affordable healthcare coverage to their employees. While it does come with some limitations, the advantages outweigh the disadvantages. However, policy buyers must examine the policy specifications, coverages, and benefits offered to make an informed decision. This will help all the members insured under the plan avail the best possible healthcare services, taking care of their health, and mental well-being.

Know the other terms associated with health insurance policy

Here’s a quick view at some of the health insurance related terminologies.

Some other informative content

Types of health insurance

Claim settlement ratio

Waiting period of health insurance

Co-pay in health insurance

What is health insurance

Best health insurance plan

Mediclaim policy

Health insurance tax benefit


Frequently asked questions

What are the benefits of buying group health insurance?

Employers or organisations with a large group of members can benefit a lot from group health insurance policies.

Firstly, group health insurance comes at affordable prices because the costs get spread over a large group of people. Additionally, group health insurance policies offer comprehensive coverage, including treatment and hospitalisation expenses. It covers inpatient and outpatient care, medicines, preventive care, and emergency services. You also get coverage for pre-existing conditions, ensuring that individuals with prior health issues can still receive help with their medical bills. Finally, group health insurance policies provide tax benefits to employers for premiums paid towards the policy.

What is the difference between group insurance and health insurance?

Group insurance is a type of health insurance. Here group insurance means health insurance that covers a large group of people like employees, organisation members, etc.

Do you get group health insurance only for employees?

Yes, you can buy a group health insurance policy only for a group of people like employees or members of an organised group. The policyholder is the employer or the group, and employees or members get the benefit of health coverage. The policy may also cover employee’s dependants if opted by the employer.

What should I prefer, group health insurance or individual health insurance?

It depends on your needs. Group health insurance policies offer comprehensive coverage at affordable premiums but with limitations. Individual health insurance allows you to customise the plan as per your medical needs. You must consider your healthcare needs and budget before choosing a policy.

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