Group Health Insurance vs Individual Health Insurance: Key Differences

Group and individual health insurance are both regulated by IRDAI and follow similar claim mechanics, but they differ across seven major parameters: who buys it, how risk is priced, waiting periods, portability, premium loading, cost, and tax treatment.

The Core Distinction

• Group health insurance is purchased by an organisation (typically an employer) for a defined group of employees and their dependants under one master policy. The company is the policyholder.
• Individual health insurance is purchased by a person directly from an insurer for themselves and their family. The individual is the policyholder.

Side-by-Side Comparison

Purchase model. Group: bought by the employer for all eligible employees. Individual: bought by a person for self or family.

Underwriting. Group: no individual medical check-up; risk is pooled across the workforce. Individual: medical underwriting required, often including a pre-policy health check-up for older applicants or higher sums insured.

Pre-existing disease (PED) waiting period. Group: typically Day 1, with no waiting period. Individual: up to 36 months under IRDAI Insurance Products Regulations, 2024 (reduced from 48 months effective April 1, 2024).

Specific procedure waiting periods. Group: usually waived. Individual: up to 36 months for listed procedures like cataract, hernia, or joint replacement.

Premium per person. Group: typically ₹3,000 to ₹15,000 per year for basic family floater cover. Individual: typically 30 to 50% higher for equivalent benefits because there is no risk pooling.

Continuity if employment ends. Group: cover ends with employment. Individual: cover continues as long as premium is paid.

Portability. Group: limited; cover does not transfer when the employee leaves. Individual: fully portable across insurers under IRDAI portability rules, with continuity of waiting periods and no-claim bonuses.

Tax treatment. Group (employer-paid): deductible under Section 37(1) for employer; not taxable as perquisite for employee. Individual: deductible under Section 80D up to ₹25,000 (₹50,000 for senior citizens), available only under the Old Tax Regime.

GST. Group: 18% GST applies. Individual: GST-exempt with effect from September 22, 2025, following the 56th GST Council meeting.

What This Means in Practice

For an employee whose company offers group cover, the group plan provides immediate, comprehensive protection at no cost. But it ends when employment ends. For continuity beyond a job change — and especially as employees age, when retail underwriting becomes harder — most financial advisors recommend holding an individual policy as a supplement.

When Group Cover Alone Is Enough

• Employee is young (under 35) and intends to stay with the employer long-term
• Group cover sum insured is ₹5 lakh or higher with family floater
• Maternity benefit is included if relevant
• The employer offers parent cover or allows voluntary top-up

When an Individual Top-Up Is Recommended

• Employee is older than 40 and underwriting may become restrictive later
• Employee plans to change jobs or move abroad
• Group sum insured is below ₹5 lakh
• Family includes parents who are not covered under the group plan

Frequently Asked Questions

Is group health insurance better than individual health insurance?

Group cover is cheaper and has fewer waiting periods, but ends with employment. Individual cover is more expensive but portable and lifelong. Most people benefit from holding both.

Can group cover replace an individual health policy?

Not fully. Group cover lapses when employment ends, leaving the employee uninsured if they don't have a personal policy in place.

Is GST applicable on both group and individual health insurance?

As of September 22, 2025, individual health insurance is GST-exempt. Group health insurance still attracts 18% GST.