Group insurance cover explained


What is it?

Group insurance plans are insurance policies that are meant to cover a group of people with a single insurance policy. “Group insurance policies are of two types: ones that the insurer provides you through your employer, and one that the insurer directly sells to a group of customers, such as students, teachers or bank employees,” said Mahesh Balasubramanian, chief executive officer of Kotak General Insurance.

For instance, the health cover provided by your employer. Premiums may be charged in a periodic fashion from your salary or may be free. Your claims can either be in the cashless form or a reimbursement. Such plans may not require prior health check-ups. “Group insurance policies may be of any type — life insurance, health insurance, or some other types of general insurance,” said Rohan Kumar, CEO, Toffee Insurance, a web insurance aggregator.

Why is it cheaper?

It is cheaper to purchase a plan that covers a large group. “Group insurance plans are cheaper as the risk is spread over a large group and the premium is generally borne by employer. In some cases, where the employees cover their dependent parents, the premium is generally higher and the premium may be split between you and your employer,” said Balachander Sekhar, CEO,, an online insurance platform.

It is the employer-employee group insurance where the premiums actually differ and are lower than the individual health plans and not where the insurer directly sells it to a group of customers, said Balasubramanian. Premiums are low because the on-boarding and distribution costs are low for group health plans. The sum insured levels are also low in case of group plans and range from 2 lakh to 4 lakh.

Should you opt for it?

Group insurance plans should definitely not be the only health plan you have. “The best strategy to have all bases covered is to supplement your group health plan with an individual or family floater plan, as it offers you the flexibility of having a customised cover tending to your family’s medical needs. It also enhances the coverage at a cheaper rate through the group health plan offered by your employer,” said Sekhar.

Moreover, group health plans cannot be customised according to the needs of a particular individual or family. “Health needs vary and group plans have limited coverage. Only the sum insured can be modified,” he said. If you only depend on your group plan, it will be problematic for you when you quit your job or your company decides to stop the cover. In both cases, you will lose a health cover.