Converting your employer group health insurance into an individual policy- Is it Important?

Insurance policies, as we all know, have become a necessity in everyone’s life and many of us are benefitted by being covered with an insurance cover provided by our employer. Though the benefits at the outline remain the same, group health insurance policies and individual health insurance policies are entirely different from each other.

The clauses are aplenty and their implications catch you unawares just when you want to avail the benefit. A simple comparison between these two kinds of policies based on the terms that they are applicable upon can be ideally useful to help one understand the differences between them. Take one that suits your healthcare needs.

Research on the insurance policy and coverage- Do your Homework!

As mentioned earlier, both, group as well individual insurance policies offer similar patterns on the coverage to the end user. However, it is important that a detailed study is carried out on the conditions and clauses under which these policies can be applicable to help you know the differences between them. It is only ideal to analyze and understand what each policy can offer with the kind of coverage towards the situation which you may be under, rather than to blindly go by the benefits that are offered by the policies on the outline.

How different is a Group Health Insurance from an Individual Policy?

Group insurance policies are basically insurance covers which are bought by organizations to extend towards their employees, as a way of showing their responsibilities and care. In which case, organizations also have the choice of either buying pre-planned insurance packages from insurance providers or by creating an in-house self-insured plan by themselves.

On the other hand, an individual insurance policy, as the name suggests, is an insurance package which is bought by an individual for his/her health cover or for a close group of people like their family, along with them. Individual policies however, do offer coverage for a group of people, unlike to the name it has, and doesn’t cover a single person alone.

Benefits of converting from a group policy to an individual plan

Waiting period is the first clause that differentiates a group health cover from an individual plan. Group health insurance policies do not come with a waiting period for all diseases as against individual health insurance policies, which come with a different terms and conditions on waiting period depending upon the different categories of diseases.  Waiting period may vary from 30 days to a period of 48 months for coverage, depending upon the nature of the diseases differing from common to specific and to pre-existing diseases. Individuals should understand during conversion or when buying policies, that waiting period for specific diseases usually vary from one insurance provider to another.

Waiver of the Waiting Period  

Now that you have successfully converted your insurance cover from a group health insurance policy to an individual health insurance plan, you need to know that by doing so, you are eligible to benefit the waiver of the waiting period. This is offered owing to the reason that the waiting period for diseases is far less under a group insurance policy, whereas it is not so when it is an individual insurance health policy. In certain cases, there may be no waiting period altogether and it is for this reason that when you convert from a group health insurance policy to an individual health insurance policy, the coverage will begin from the same day on which you have made the conversion to an individual policy.

Key points to remember during the conversion of your policy

Detailed below are a few key points which every individual must bear in his/her mind when converting from a group health insurance policy to an individual health insurance plan.

Conversion must be and can be done only to the same insurance provider company, when shifting from a group health insurance policy to an individual health insurance policy. Or in simple terms, it is applicable to shift the group insurance cover to an individual health plan only with the same insurance provider where you held the group policy and not with any other insurance company of your choice. Also, the conversion can be made possible only with the consent of your employer and not under your sole discretion.

The next key point to remember is the policy lapse date and the conversion should be completed within 45 days before the policy which you wish to convert expires. It would be impossible to convert during any time frame lesser than this stipulated 45 days or after the policy has expired.

Medical tests may be required in certain cases, as it is possible that the insurance provider may require a medical test report to check on the person’s or the family’s medical history before converting the policy from the existing group plan to an individual policy. Usually, the insurance provider begins the process of converting the policy only after the medical report has been provided and evaluated.

With the current taxation norms in practice, it is also important to remember that all financial services attract an 18% GST, and this applies on the insurance coverage bought as well, with effect from the 1st of July, 2017.

Since health insurance policies and the coverage offered by the insurance providers depend upon certain discerning  factors such as age of the insured, pre-existing diseases, location and the prevailing taxes, premiums are subject to vary from one policy holder to another and also from one insurance provider to another.