Personal health insurance policy compensates the insured in case of hospitalization due to illness, disease or accident up to the sum insured limit mentioned under the policy in return for a nominal amount known as a premium. Personal health insurance is also known as a retail health insurance policy. Personal health insurance can be taken on an individual basis as well as on a group basis, in which the family can be included. The sum insured under the personal health insurance policy can be on a floater basis as well as non floater basis. Floater sum insured is where the sum insured can be utilized by all the members of the health insurance policy without any restrictions. Non-floater sum insured is where each individual would be given a distinct sum insured which cannot be transferred from one individual to another individual. In a floater policy, the sum insured would be floating among the members of the policy.
Group health insurance is also a type of health insurance policy in which the premium would be paid by the employer and the coverage would be enjoyed by the employees. The sum insured under the group health insurance policy can be floater or non floater depending on the interest of the employer. The sum insured under the group health insurance policy can be divided into slabs and it is not mandatory for every member to have the same sum insured.
The sum insured can vary among a group of members under the group health insurance policy. In group health insurance, the floater sum insured can be utilized by any of the family members of the employee. Another advantage of group health insurance is that it doesn’t have a waiting period, unlike retail or personal health insurance policies.
The group health insurance policy would be decided by the employer and the employee would have no say in deciding the amount covered under the policy. Whatever is given by the employer has to be accepted by the employee in the case of a group health insurance policy.
What’s on this page?
Below are the personal health insurance advantages when compared to group health insurance:
- No dependence: The major reason to buy a retail or personal health insurance policy is that there would be no dependence on the employer as it is in the case of group health insurance. The retail or personal health insurance policy can be discontinued at any point in time by the employer and the employee would be left without any option of health insurance coverage.
The other benefit in retail health insurance policy is that one need not depend on the employer for the health insurance coverage. You can decide the coverage required and pay the premium to purchase the retail health insurance policy.
The retail health insurance policy can be controlled by you unlike the group health insurance policy which would be controlled by the employer. The employer can make any changes to the group health insurance policy and employees had to accept it without any say.
- Tax Benefit: Retail health insurance policies have tax benefits which are not available in the group health insurance policies. The premium paid for the retail health insurance policies are eligible for income tax exemption for you whereas the group health insurance premium is paid by the employer and employees cannot claim any income tax exemption.
The income tax act states that one can claim up to Rs.1 lakh in exemption for the premium paid towards the retail health insurance policies under different sections such as health insurance premium paid for self, spouse, dependent children and senior citizen parents. The tax benefit can be availed in case of retail health insurance up to the limit specified under the income tax act.
- Financial planning: The personal health insurance policy is an important element in the financial planning process. Personal health insurance policy can be renewed at any point of time and helps in saving your finances in case of emergencies. The sum insured under the personal health insurance policy can be decided based on the requirements of the customer. The sum insured under the personal health insurance policy can be increased when needed as a part of the financial planning process.
- Flexibility: The retail health insurance policy has a high level of flexibility which means that the customer can change the policy conditions, coverage, add-ons and many other things as and when necessary which is not otherwise possible under the group health insurance policy. Group health insurance policy is employer dependent policy in which the flexibility to make any changes to the policy would be nil for the employee as any changes to be made to the policy would be decided by the employer.
The retail health insurance policy offers you the freedom to customize the health insurance policy as per your requirements whereas the group health insurance policy does not offer any such requirements to you.
The addition or deletion of family members in personal health insurance policy can be made at any point of time which is not otherwise possible in the group health insurance policy. In the group health insurance policy the addition or deletion of family members depends on the type of policy, if the policy is covering employees only then it would not be possible to include family members even on payment of additional premium. But in the case of retail health insurance policy an individual policy can be converted to family health insurance policy on payment of additional premium. - No claim bonus: The other advantage of retail health insurance policy is the no claim bonus available under the policy. No claim bonus is the additional sum insured provided under the personal health insurance policy to the insured for not making a claim during the previous year under the policy.
The no-claim bonus would increase for every claim free year and sometimes exceed the base sum insured of the policy providing the customer with an extra sum insured in case of hospitalization.
