Health Insurance - Group / Corporate Insurance

Group policies are often tailor-made covers to suit the requirements of the group. Thus, in group policies, one will find several standard exclusions of the individual policy being covered under the group policy.

One of the most common extensions in a group policy is the maternity cover. This is now being offered by some insurers under individual policies, but with a waiting period of two to three years. In a group policy, it normally has a waiting period of nine months only and in some cases, even this is waived. Maternity cover would provide for the expenses incurred in hospitalization for delivery of child and includes C- section delivery. This cover is generally restricted to Rs. 25,000 to Rs. 50,000 within the overall sum insured of the family.

Children are normally covered from the age of three months only in individual health policies. In group policies, coverage is given to babies from day one, sometimes restricted to the maternity cover limit and sometimes extended to include the full sum insured of the family.

Several exclusions such as the pre-existing disease exclusion, thirty days waiting period, two years waiting period, congenital diseases may be covered in a tailor-made group policy.

The premium charged for a group policy is based on the age profile of the group members, the size of the group and most importantly the claims experience of the group. As the premium varies year on year based on experience, additional covers as mentioned above are freely given to the groups, as it is in the interest of the group policyholder to manage his claims within the premiums paid.

In India, regulatory provisions strictly prohibit formation of groups primarily for the purpose of taking out a group insurance cover. When group policies are given to other than employers, it is important to determine the relation of the group owner to its members. Here the premium collected from each individual account holder may be quite low, but as a group the premium obtained by the insurer would be substantial and the bank offers a value add to its customers in the form of a superior policy and at better premium rates.

In group policies, there is provision for discount on premium based on size of the group as also the claims experience of the group. Group insurance reduces the risk of adverse selection, as the entire group is covered in a policy and enables the group holder to bargain for better terms. However, in recent years, this segment has seen high loss ratios, primarily due to underpricing of premium due to competition. While, this has led to some to review of premium and cover by insurers, it is still difficult to declare that the situation has since been corrected.

The premiums could be either totally paid by the employer or group owner, but it is usually on a contribution basis by the employees or group members. However it is a single contract with the insurer, with the employer/group owner collecting the premium and paying the premium covering all the members.

Tailor-made group policies offer covers such as dental care, vision care, and cost of health checkup and sometimes, critical illness cover too at additional premiums or as complimentary benefits.