Last weekend was full of festivities and meet-ups. One of them – a pleasant lunch for the extended family organised by an outgoing cousin – turned into a happy reunion with aunts and uncles, cousins, and their children and grandchildren.
Since I tend to be asked insurance questions everywhere, it was no surprise when a cousin asked whether I could suggest a group hospitalisation policy for all these family members.
Regrettably, the answer was no. A group policy can be issued only to members of an existing organisation that has not been formed solely for taking insurance cover, and a family, however large, is not a formal organisation. This group of 40 also cannot be covered under a family policy as it defines family members by closeness and financial dependence. They usually restrict coverage to self and spouse, two dependent children, and parents or parents-in-law.
Another cousin said he had signed up for a group policy offered by the bank he has an account with. It had a healthy sum insured and a reasonable premium. As a retiree, he was relieved, since obtaining hospitalisation insurance at that stage of life can be difficult. This was good to hear. However, I had to caution him that group policies are good — until they aren’t. From an individual’s point of view, signing up is usually easy. Often, there is no initial health check-up, waiting periods may be waived or reduced, and sub-limits for room rent and similar expenses are not imposed.
These are real advantages that are hard to negotiate in an individual policy. There is also reasonable flexibility in choosing the sum insured, and there is an organisation of your affiliation – the bank, club or association – that handles policy administration, whether at issuance, renewal or at the time of claims.
But there are disadvantages too. The policy exists only because your bank, club, alumni association or retirees’ association has chosen to tie up with an insurer and enroll its members. Its continuation is neither assured nor within your control.
This can put you at a disadvantage if the policy is discontinued, and this is something that has happened often. A few years ago, when several banks were merged, many such group policies for account holders simply vanished, with no reasonable replacement. Many group policies also do not allow members to convert their cover into an individual policy.
The solution is to hold an individual policy alongside. It may sound redundant, but even a small policy provides limited protection and, importantly, creates a track record. If the group policy ceases, the individual policy can be enhanced.
The same issue arises with employer-provided group policies. What happens when you retire and the cover ends? I have helped a retiring relative obtain an individual policy with credit for pre-existing disease waiting periods, by citing continuous coverage under the employer’s policy over several years and the absence of claims. This works only in specific circumstances and requires persistence. It also helps if the policy is taken from the same insurer. One way or another, remember this: group policies are excellent — up to a point.
(The writer is a business journalist specialising in insurance & corporate history)
Published – January 26, 2026 06:27 am IST
