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Merritt Personal Lines Manual: Individual Insurance Coverage

Individual insurance is a main option if you are self-employed or work for a small company that doesn't offer health insurance. Mechanically, an individual policy works in the same way that a group policy does; the main difference is that the premiums are usually higher because the administrative costs are, too.

One advantage of individual insurance: You can tailor a plan to fit your needs. However, shop carefully. Coverage and costs vary widely, so be sure to evaluate the medical services covered, benefits paid and what you must pay in deductibles and co-insurance for each kind of coverage.

Group coverage is typically offered through your employer, but unions, professional associations and other organizations also offer this type of insurance. Group coverage has the distinct advantage that premiums are lower due to lower administration costs for large groups.

Some employers offer employees a choice of fee-for-service and managed care plans. In addition, some group plans offer dental insurance as well as medical.

Although group and individual health insurance policies share many of the same policy provisions, there are significant differences.

In an individual policy, the contract is between the insured and the insured's insurance company. In a group policy, the contract is between the company and the insured's employer, union, trust or other sponsoring organization.

A caveat: The insured's family members may be covered under both group and individual policies. But the insured should determine how they would be covered before signing on to either kind of policy.

While group policies may have fewer limitations, they do have one important drawback. If the insured change jobs, the insured may no longer be covered under the insured's last employer's group policy. However, individual health insurance contracts continue regardless of change of employment.

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