4 Benefits of Converting Group Health Insurance to An Individual Plan?

5 Benefits of Converting Group Health Insurance to An Individual Plan?

There are many benefits of converting group health insurance to an individual plan. Individual plans are more affordable, flexible, and offer many other benefits. Due to this supremacy, if you, like many others, are thinking of exercising your conversion privilege, you are probably choosing the smart option. So, let’s see the many benefits of using your conversion privilege.

But before we dive into the benefits, let us have a basic introduction of individual and group health insurance and how these policies differ from each other.


What Is The Difference Between Group Health Insurance And Individual Plan?


Individual Health Insurance

Individual Health Insurance, as the name says, is purchased by an individual for himself and his family. And one of the aspects of individual health insurance that makes it so lucrative is that you cannot be denied health insurance no matter your medical condition. Let’s take an example, a 50-year-old guy without a medical condition will pay the same premium as a 50-year-old guy with a medical condition.

Also read: Children Health Insurance Program And How It Works?

Also, individual health insurance often comes cheap. The risk in individual policies is spread across thousands of people, making it a more affordable deal. Thus, if you accept an HRA instead of a group insurance policy from your employer, you might be in for a better deal.


Group Health Insurance

The employer buys group health insurance for its employees and their families. In group policies, the employer has the control and decides which areas to cover in the plan.

Also, the premium usually increases every year, based on the previous year’s medical charges. Another aspect that makes group health policies expensive is that the risk is divided amongst the company employees. Thus, the premiums can rise alarmingly over the years.

But, nowadays, the employer also incurs a set percentage of the premium along with the employee. This brings down the cost incurred for the employee, but the control of the policy remains in the employer’s hands.

Also read: Top 5 Alternatives to Traditional Health Insurance!

Below is a table that illustrates how annual average premiums differ between individual and group health insurance policies.


Individual Health Insurance Policy Group Health Insurance Policy
Single $5,472/year $7,188/year
Family $13,824/year $20,576/year


Source: eHealth and KFF Employer Health Benefits Survey, 2019

As you can see, individual health insurance is a brilliant deal.

Now that we know the basics, let us discuss the benefits of converting group health insurance to an individual plan.


Benefits Of Converting Group Health Insurance To An Individual Plan


#1: Individual Plan Is More Affordable!

As discussed earlier, individual plans are more affordable, and the reason is simple- the risk pool. In an individual plan, the risk pool is all those people over the country that have taken up that plan. The number of these people may be in hundreds, thousands, or even millions. This is the one of the reasons why term plans are so affordable. Because so many people take up that plan!

Also read: What are the different types of Health Insurance Plans

On the other hand, group health insurance is usually costlier because the risk pool is all the employees of that organization. Since that is usually a smaller number, thus the premiums rise. And if any employee gets diagnosed with a chronic illness or undergoes surgery, the premiums rise even further the next year!


#2: Do Not Forget The No-Claim Bonuses

A No-claim bonus is a lucrative power you can exercise only with an individual plan. So, what is this superpower? When you do not make any claim at all, you get a no-claim bonus. With a no-claim bonus, you can discount insurance premiums on renewal or a no-extra-cost add-on. Great, isn’t it?

There is a fair chance that you will avail of a no-claim bonus next year if you have an individual plan, but that is not the case with group policies. Somebody or the other will file a claim.


#3: It Is All About Control & Convenience

This is the factor that gives the biggest push towards opting for an individual plan. It gives you control over what you are buying.

You will agree with me, whenever we pay for anything, we should pay for what we want to buy, not what we are getting randomly. While group insurance policies are well-thought, but every person’s needs are typical to his circumstances. A group policy cannot provide you exactly what you want. You may need a cover for arthritis, but your company might instead be giving you cover for cancer. See the difference yet?


#4: Flexibility To Change Employers

This aspect is quite apparent. Your cover ends as soon as you leave your job. And if some emergency strikes while you are between your old and new job, you will not have any policy to protect you. Thus, it is always a good idea to have an individual policy.

And you know the best part if you have a group policy, and you want to leave your current job, you can get your current policy converted to an individual one, usually without a physical examination. This is called a conversion privilege. And obtaining it is simple. You only need to inform your life insurance company within 31 days of termination of your job with the group policyholder. However, you need to remember that after 31 days, you need to go through a new approval process.


In A Nutshell…

So, is converting from group health insurance to an individual plan a good idea? Yes, definitely! Individual insurance plans are cheaper, offer more control, and have no-claim bonuses. And even if you have to leave your job, you have at least one worry off your mind. Peace of mind is a huge thing, and an individual plan offers more of that than a group policy.

So, this was all about the benefits of converting group health insurance to an individual plan. We hope that you liked the information provided. If you have any doubts, questions, or suggestions, please drop them below. We are all ears!