Health insurance is a type of insurance coverage that pays for medical and surgical expenses that are incurred by the insured (Investopedia). There are two types of health insurance, individual and group. Individual health insurance is covers an individual, while group health insurance covers all eligible members of a certain group. Group health insurance is usually offered by employers to its employees as part of its benefit package. Both types of health insurance offers protection to individuals, the only difference is the extent of the protection and its cost to the insured. The following is a short comparison of the individual and group health insurance.

Individual health insurance – nature, benefits and limitations

Individual health insurance is availed by individuals to protect themselves in times of sickness. An individual has a lot of health insurance plans to choose from. Individual health insurance is flexible. A customer is free to choose which benefits and features his insurance should cover. On the down side, individual health insurance, in general, is more expensive than group health insurance. This has been especially true for people with pre-existing conditions.

Group health insurance – nature, benefits and limitations

Group health insurance provides healthcare coverage to a select group of people. It is provided by employers as one of the major benefits extended to employees. Group health insurance is typically uniform in nature, meaning the same benefits are enjoyed by all covered individuals. Probably the best benefit of group health insurance is that it costs less for participants than individual plans that offer the same benefits. This is possible because the risk is spread over the entire group, composed of low-risk and high-risk individuals. Furthermore, an eligible person does not need to undergo physical examination to be qualified for coverage. This benefit is tax-free for those receiving free health insurance. For those who bear the cost of group health insurance, the entire cost is deductible. One limitation of group health insurance is that the insured person has limited choice on the features and benefits of the plan. There are fixed choices provided for the whole group.

Group or individual health insurance: which is better?

In terms of flexibility of features, individual health insurance is better than group health insurance. Group health insurance, on the other hand, is better for people who would otherwise find it expensive to get individual health insurance.

The type of health insurance one gets is important. People who are choosing between individual and group health insurance must assess his or her medical needs and weigh it against the cost or additional cost it entails.