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Group Insurance - Pros and Cons

Group insurance comes with many advantages when compared to individual policies. These include lower premiums, relaxation in waiting period for covering pre-existing illnesses, maternity covers and normally no prior medical check-ups. 

Employer-Employee is, of course, the most common form of group, wherein an employer takes life and health insurance cover for its employees and their family members.

However, given the benefits of group insurance, other kinds of groups are becoming common such as particular credit card or bank account holders, housing society, cultural group etc. Similar to the employer-employee group insurance, these tie-up with an insurance company to provide cover for its group members. 

Beware, as per IRDA guidelines “no group should be formed with the main purpose of availing insurance. There should be a clearly evident relationship between the member and the group manager for services other than insurance." No minimum group size has been stipulated and each insurer has to decide what is a viable number for it to provide the desired cover.

As regards a group policy:
- Only one master policy will be issued to the group in the name of the group
- In a non employer-employee group policy you will given a certificate of insurance that lists the benefits, premium amount and terms and conditions of the policy.
- As soon as you cease to be a member of the group, your cover too ceases. However, the insurance company should offer you a cover on individual basis
- Discounts, if any, are supposed to be passed on to the group members. 
- Administrative charges, if any, levied should be clearly informed to the group members 

Having said that, one of the most common problems with a group insurance is that you have to accept the extent of sum assured under the policy. This may not always be in line with your cover requirements.

When choosing a particular group cover you have first evaluate the usual features as you would normally do for an individual policy such as what is covered, exclusions, sub-limits, coverage of existing diseases, hospital network, etc. Besides, you must consider the average age of the people covered under the particular group plan and you should ideally fall in the same age-bracket. 

By the way, it is prudent not to depend solely on a group cover (whether employer or any other group). You must additionally buy an own individual suitable insurance plan.

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