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What's the difference between group and individual health insurance?



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With group and individual insurance, there are many differences, but it all comes down to insurability. Meaning will you be a big risk factor to health insurance companies. When purchasing individual insurance, a person will usually go through a health questionnaire, as well as medical exams. This is done to find out if there is evidence of the applicant being too high of a risk.


A applicant may be denied for a number of reasons dealing with the persons habits, medical history, income, age, and many other factors that would affect the insurance company in a negative way. You may be able to get insurance as an individual with problems listed above, but you may have some limitations on what your policy covers.


With group insurance, it is much different than an individual insurance. Group insurance is offered to people without any medical questionnaires, or medical exams. This is done, because the insurer knows that it will all balance out in the end. That means that there may be some people in bad health, but that will not outweigh the number of people in good health. So it will all balance out in the end, usually leaving the insurance company with the profit.


With group insurance the risk to the insurer will be less as the size of the group increases. So basically the more people that are in the group insurance, the less of a risk the insurance company has. This is because there are always more people in good health that will hardly use their insurance, than there are people in bad health. So as the size of the group increases the insurance company underwrites more group policies and increase the total number of individuals covered. 


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