Question

define and discuss in detail the similarities and differences between group insurance and self-insurance.

Answer 1

GROUP INSURANCE

DEFINITION

Group insurance means a group of people ie; the members of a society , professional association, or the employees of a particular employer are covered by an insurance policy. In a group insurance policy, an organisation or employer will purchase a master contract from an insurance company. The premium will be based on the number of members and the amount of coverage offered.

SELF INSURANCE

DEFINITION

Rather than by purchasing an insurance policy, Self insurance means insurance of oneself by maintaining a fund to cover possible losses.

DIFFERENCES

1.For group health insurance the company can get all new employees covered under its policy who may join the organisation after buying the group insurance policy. In self insurance there are personalized plans.

2.Group insurance Opportunity to obtain basic coverage for all without evidence of insurability.. Cost sharing with the employer. But being self-insured means that rather than paying an insurance company to pay medical, dental and vision claims, we pay the claims ourselves, using a third-party administrator to process the claims on our behalf.

3. Group insurances are significantly lower costs .In a self-insured plan, our employer's costs might be high one month, and low the next.

4. In group health insurance, one does not have to submit any medical reports, there is no waiting period and there is full coverage for any pre-existing conditions.But self insurance do not have insurance to cover emergency needs. Instead, plan to pay for everything out of our own pocket. This means that if our home burns down, we will have to pay to rebuild it.

SIMILARITIES

Both group and self insurance plans are cheaper. And rest of the similarities are both have,

• Improved Data.
• Less Regulatory Burden.
• Lower Premiums for Employees.
• Provision of Services.
• Increased Risks.