Advantages and Disadvantages Of Insurance Individual Health Insurance VS Group

In this article, we examine the reasons for employers to obtain health insurance for employees and we will examine the pros and cons of the two viewpoints.

VS private health insurance individual health insurance group

Probably the most important feature of group insurance is replacing subscribe individual underwriting group. Underwriting group in general does not care aspects of health or other insurability of a particular individual. Instead, it is to get a group of individual lives or, more importantly, such an aggregation of groups of lives which will produce a predictable rate of mortality or morbidity. If a sufficient number of life groups is obtained, and if these groups are reasonably homogeneous in nature, morbidity and mortality can be expected. The point is that the group becomes the underwriting unit, and insurance principles can be applied, as in the case of the individual. To ensure that the groups will be obtained fairly homogeneous group insurance underwriting process aims to control adverse selection by individuals within a group.

In the underwriting group, then some important features that must be present or are inherent in the nature of the group itself or can be applied in a positive way to avoid serious adverse selection, such as:

Insurance funds for the group: Insurance must be incidental to the group; group members ie are joined by another goal to obtain insurance. For example, group insurance offered to employees of a particular employer should not be the characteristic motivates the formation and existence of the group.

Flow of people across the group: There must be a constant flow of people across the group; ie, there must be an influx of new young lives for the group and a stream on the group of elderly and disabled lives. With groups of employees who work actively, we can assume that they are on average health.

Automatic determination of benefits: insurance underwriting group usually requires automatically to determine the amount of benefits in individual lives, which is outside the control of the employer or employees. As the mechanism evolved group, however, insurers have responded to market demands, especially large employers for more flexibility in the choice of benefits.

Minimal participation by the Group: Another underwriting control is the requirement that almost all the beneficiaries of a particular group to be covered by insurance. Covering a large part of a particular group, the insurance company makes a save against the excessive proportion of poor living. The employer pays-all non-contributory scheme is simple and gives full control over the employer's plan. New employees entering the company must be informed of your insurance privilege. A number of subscription importance controls are typically used in group insurance plans, but the above discussion provides an assessment of subscription subscription theory group. The discussion applies for groups with large numbers of employees.

Most groups, however, are not great. The group size is an important factor in the underwriting process.

GP: The second group insurance feature is the use of Group Policy (contract) held by the owner as the owner group and a certificate booklet or other contents insurance shares held by plan participants. The main contract is an exponent of the contractual relationship between the owner of the group contract and the detailed document insurance company. The quadripartite relationship between the employer, insurer, employee, and dependent on a group insurance plan can create a number of interesting and unusual problems that are common only for group insurance.

Cost reduction: The third feature of group insurance is that it is generally cost less protection than is available in individual insurance. The nature of the group approach allows the use of the mass distribution and mass administration methods to pay for operational savings are not available on individual insurance. Moreover, as the group insurance is usually purchased on an individual basis, premiums are based on an actuarial valuation of the whole group, so some healthy person can possibly buy insurance to a lower cost. Cost of the employer's subsidy is a critical factor in the design of group insurance plans. Probably the most significant savings in the cost of insurance marketing group lies in the fact that the group commissions absorb a much smaller proportion of the total premiums that individual commission contracts.

Due to the large costs involved in many cases of group insurance, commission rates are considerably lower than those of individual contracts and are normally classified as low premium increases. Any large business group insurance buyer directly with the insurance companies and commissions are eliminated. The nature of administrative procedures allows simplified accounting techniques. In the early days of group insurance, the administration was simple.

Flexibility: Unlike the individual contracts to be taken as it is written, the largest employer usually has options in the design and development of the group insurance contract.

Experience Note: Another feature of group insurance is that premiums are often subject to classification experience. The experience of individual group can have an important influence on dividends or adjustments to value. The point where a group is large enough to be eligible for classification experience varies from one company from the book of insurance and experience. Advantages and Limitations Group mechanism.

Insurance group also extended protection to a large number of uninsurable. The survivors, disability and health insurance programs increased rapidly, but many observers believe that if no insurance group provided substantial amounts of life insurance, health insurance and protection of retirement, social insurance would have developed even faster.

Disadvantages: From the perspective of the worker, group insurance has great restrictions- the temporary nature of the coverage. Unless an employee takes its coverage to an individual policy, which is usually the expensive ore and offers a less liberal coverage, the employee loses his protection insurance if the group plan is closed and often retired because employment is closed. Group life and health protection continues after retirement in a significant proportion of cases in the United States today, but often at reduced levels. Many officers, however, discuss the group insurance coverage to individuals as a basis for discussing the need for additional amounts of individual life and health insurance.