Individual Health Insurance
What is individual health insurance?
Individual health insurance is health insurance that a person buys on his own, and not the health insurance that he avails of because he is employed with a particular organization or is part of a group. Individual health insurance can be bought by a person for his own self or for his dependant family members. In the United States, majority of the Americans have health insurance through their employer or through government programs, but in India, the coverage is not too wide. Thus individual health insurance is poised for growth in India
How can I buy individual health insurance coverage?
Individual health insurance can be bought directly from the Insurance company, or from brokers , or agents. These days, health insurance policies are also available at the website of the insurance companies. Before buying a health insurance policy, it is important that you compare the price and features of the health insurance plans offered by various companies. This can be done on sites like ours (policytiger.com)
Brokers and agents are intermediaries through whom you can purchase health insurance products. A broker can offer the health insurance products of multiple health insurance companies, whereas an agent will be able to offer you the health insurance product of one insurance company. The broker or the agent is paid a commission on the sale of the policy. A list of brokers is available on irdaindia.org. Agents can be found in the internet, or if you ask around.
What is the difference between group insurance and individual insurance?
In a group insurance plan, members having some similarity (working in the same organization, same profession etc) form a group and the health insurance company collectively insures the group. Group insurance policies are very popular with organization where they form a group of all the employees, and get them collectively insured. Each member is then insured for a particular sum, say Rs 3 lakhs. An advantage of a group policy is that the premium that is paid per person is far less than what the premium that would have been individually for the same insurance plan. Another advantage of a group insurance plan is that maternity is very often covered in a group insurance plan, but is rarely covered in a individual health insurance plan.
A group health insurance policy also helps in covering people who would otherwise not have been insured under an individual life insurance plan. The only problem with a group insurance plan provided by an employer is that the coverage ceases when the employee leaves the organization.
How are premium rates determined?
For individual health insurance policies, in India, health insurance premium rates are typically determined on the basis of the person’s age and the amount of health insurance the person requires. Typically, pre-existing diseases are not covered. For domiciliary treatment to be covered, the premium that needs to be paid goes up. For family floater health insurance policies, the premium depends on the age of the eldest member and the number of family members that need to be included in the plan. These days, some of the health insurance companies have started covering maternity in their individual health insurance plans too.
Premiums for group insurance plans depend on the size of the group, the characteristics of the group, the age median of the group etc. The scope for negotiation of premium is much higher in group insurance plans.
Are any pre-existing medical conditions covered?
Pre – existing diseases are covered , but with a caveat that they would start getting covered after three or 4 continuous policy years. Companies have this cooling off period because otherwise they will suffer under the principle of adverse selection, which means that only the people who have been detected with the disease will come and get themselves insured under the plan. This would go against the basic principle of collective risk that an insurance company operates under.
To avoid adverse selection, insurance companies are allowed to look at your medical records for pre-existing conditions and may choose not to cover certain conditions for a specified period of time. This is known as an exclusionary, or pre-existing condition, waiting period.