Group Plan Vs. Individual Policy

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August 3rd, 2009

If you are considering buying an insurance policy, there are a few ways you can go about it. Of course, you are looking to get the best possible coverage at the lowest possible monthly rates. There are other things to think about too, like maximum benefit limits and special features that can be added, at a cost, to insurance policies.

You could chose to get an individual insurance plan, one that covers only you or your actions, or you could buy into a group insurance plan. These collective arrangements can help when bargaining with the insurance providers, but there are some costs that the organizer or employer must pay in that arrangement. Here are a few things to keep in mind about the difference between group insurance plans and individual policies.

Advantage/Disadvantage to Individual Policies

The basic individual insurance plan covers just one person, and the risk assessment is based on only them. Depending on what the person seeking insurance has in the way of existing conditions or liabilities, they may get a higher or lower monthly premium than other individuals. And because a individual policies apply to just one person, those seeking coverage can basically pick from the side variety of plans available on the market.

Group plans usually offer just one or two options to those getting coverage. Plus, the individual contracts often contain less red tape. If you want to supplement or enhance your policy with better insurance features or customer service, all rates will once again be set against your personal risk to the insurance company.

Advantage/Disadvantage to Group Policies

With a group insurance policy, individuals are able spread their personal risk out over a large pool of group members. All of the group members pay monthly premiums, and that means that the company can expect a greater number of checks every month from a greater number of customers.

That’s good for their business, so that means they are willing to offer coverage to those who otherwise might not qualify for an affordable rate. It’s selling insurance in wholesale and in bulk, which doesn’t necessarily mean lower costs, because the company must compensate for sick members, but it does open those doors to people in need. However for some people, individual plans can be secured at comparable prices to group plans, often without the limitations. And for a relatively healthy individual, the rate may even be lower on an individual plan.