Is there any difference between Individual Insurance Policies and Group Insurance Policies? Explain.

If individuals are provided insurance coverage on their own lives that is individual insurance. Group insurance is a means through which a group of persons, who usually have a business or professional relationship with the contract owner, are provided insurance coverage under a single contract. Generally, it is provided by employers for the benefit of their employees. Creditor-debtor groups like the loanees of a housing finance company, and miscellaneous groups like professional associations, religious groups, customers of large retail chains, and savings account depositors, poorer sections of the society, land less agricultural workers also can avail the benefits of group insurance. The following table shows the difference between Individual Insurance plans and Group Insurance plans. Sr. No. Individual Insurance Plans Group Insurance Plans 1. Insurance on individual lives. Insurance on a group of lives (Group selection of risks). 2. Individual policies are issued. A single policy is issued to the entire group called Master Policy. 3. This is voluntary and individual decision. No compulsion. Compulsory for all new entrants into the group. 4. A contract between the individual and the Co. A contract between the Group representative and the Co. 5. Long term contracts. One-year renewable contracts. 6. Premium is constant throughout the term. Premium varies every year due to the change in the group. 7. Underwriting standards are strict and individual selection. Underwriting standards are very liberal. Only group selection. Rarely Medical Examination is required. 8. Premium is higher as the administration cost is high. Premium is low due to mass scale Administration. 9. Individual has the choice of plan, term, Sum Assured etc. An individual has no choice in terms of Contract. 10. Participate in the profits of the Company. Do not directly participate in the profits. If the claims experience is favourable, experience rating adjustment is made in the subsequent year's premium. 11. Terms of the contract depend on the individual characteristics. Terms of the contract depend on the characteristics of the Group as a whole.