The primary difference between individual and group health insurance lies in how the policies are obtained and who they cover.
Here's a breakdown:
Group Health Insurance:
- Obtained through:
- Typically offered by employers to their employees.
- Can also be offered through organizations or associations.
- Typically offered by employers to their employees.
- Coverage:
- Covers a group of people under a single policy.
- Often includes employees and their dependents.
- Covers a group of people under a single policy.
- Key characteristics:
- Generally, lower premiums due to risk being spread across a larger group.
- Often no or limited medical underwriting (meaning pre-existing conditions are usually covered).
- Coverage is tied to employment or membership in the group.
- Generally, lower premiums due to risk being spread across a larger group.
Individual Health Insurance:
- Obtained through:
- Purchased directly from insurance providers by individuals or families.
- Purchased directly from insurance providers by individuals or families.
- Coverage:
- Covers an individual or a family based on a policy tailored to their needs.
- Covers an individual or a family based on a policy tailored to their needs.
- Key characteristics:
- Premiums can be higher, as the risk is not spread across a large group.
- Medical underwriting is typically required, which can affect premiums or coverage for pre-existing conditions.
- Coverage is portable and not tied to employment.
- Premiums can be higher, as the risk is not spread across a large group.
In simpler terms:
- Group insurance is like buying in bulk; you get a discount because you're part of a large group.
- Individual insurance is like buying retail; you get personalized service but pay a higher price.
Therefore, the core difference is the way the insurance is obtained, and the risk pool that is created.