Comparing Group Health Insurance vs Individual Policies
As an FCA-authorised expert with over 800,000 policies arranged, WeCovr helps UK businesses navigate the complexities of private medical insurance. This guide explores whether a group or individual policy is the right, most cost-effective choice for protecting your most valuable asset: your people.
Which is cheaper — and better — for your business?
Deciding between group health insurance and individual policies is one of the most significant choices a business owner can make for their team's welfare and the company's financial health. While the simple answer is that group policies are almost always cheaper per person, the "better" option depends entirely on your company's size, budget, and goals.
A group private medical insurance (PMI) scheme is a single policy that covers a group of people, typically the employees of a company. An individual policy, as the name suggests, is taken out by one person for themselves or their family.
For a business, the choice isn't just about covering healthcare; it's a strategic decision that impacts talent acquisition, employee retention, and overall productivity. Let's delve into the details to help you make an informed choice.
Understanding the Core Differences: Group vs. Individual PMI
At first glance, both policy types offer the same fundamental benefit: faster access to private healthcare for acute medical conditions. However, the way they are structured, priced, and managed differs significantly.
Here’s a high-level comparison:
| Feature | Group Health Insurance | Individual Health Insurance |
|---|---|---|
| Primary Buyer | An employer for its employees | An individual for themselves/family |
| Cost Per Person | Generally lower due to risk pooling | Generally higher, based on individual risk |
| Underwriting | More favourable options, e.g., Medical History Disregarded (MHD) for larger groups | Stricter underwriting, e.g., Moratorium or Full Medical Underwriting (FMU) |
| Pre-existing Conditions | Can be covered on MHD schemes | Almost never covered |
| Flexibility | A set level of cover for all employees (or tiers) | Highly customisable by the individual |
| Administration | Managed by the employer | Managed by the individual |
| Tax Treatment | A tax-deductible business expense for the employer; a taxable benefit for the employee | Paid from the individual's post-tax income |
Let's break down these crucial differences.
A Note on What UK Private Medical Insurance Covers
Before we go further, it is essential to understand a fundamental principle of the UK PMI market. Standard policies are designed to cover acute conditions that arise after you take out the policy.
- Acute Condition: A disease, illness, or injury that is likely to respond quickly to treatment and lead to a full recovery (e.g., joint replacements, cataract surgery, cancer treatment).
- Chronic Condition: A condition that is long-lasting and often has no known cure. It can be managed but not cured (e.g., diabetes, asthma, high blood pressure).
Standard private health cover, whether group or individual, does not cover chronic conditions or pre-existing conditions (illnesses you already had before joining). The main exception to this is on a 'Medical History Disregarded' group scheme, which we'll explain shortly.
Cost Comparison: Why Group Cover is More Affordable
The most compelling argument for group health insurance is cost. Insurers can offer lower premiums per person on a group scheme for several key reasons:
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Risk Pooling: The insurer's risk is spread across a diverse group of people of varying ages and health statuses. The healthier, younger members of the group balance out the risk posed by older members or those who might claim more frequently. This "law of averages" makes the overall risk profile much more predictable and stable for the insurer.
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Economies of Scale: Insuring a group of 20, 50, or 100 people under a single policy is far more administratively efficient for an insurer than managing 100 separate individual policies. This reduction in administrative overhead is passed on to the business in the form of lower premiums.
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Reduced 'Adverse Selection': With individual policies, people who suspect they might need medical treatment are more likely to seek cover, a concept known as 'adverse selection'. In a group scheme, the entire workforce (or a specific class of employee) is included, meaning the insurer gets a natural cross-section of healthy and less healthy individuals, which lowers the overall risk.
How are Premiums Calculated?
- For Group Policies: The premium is typically based on the average age of the employees, the industry the business operates in (some are higher risk than others), and the postcode of the business.
- For Individual Policies: The premium is highly personalised. It's calculated based on your specific age, your postcode, your smoking status, and your medical history. A 55-year-old will always pay significantly more than a 25-year-old for the same level of cover.
Example Scenario:
Imagine a 45-year-old marketing manager in Manchester.
- As an individual: They might be quoted £70 per month for a comprehensive policy.
- As part of a company group scheme: The average cost per employee might be just £40 per month. The business pays this premium, but the employee pays income tax on the value of this benefit.
For the business, providing this cover is a powerful tool. For the employee, receiving comprehensive health insurance for a small amount of tax is an incredibly valuable perk.
The Power of Underwriting: The Hidden Gem of Group PMI
Underwriting is how insurers assess risk before offering a policy. This is arguably the single biggest advantage of group health insurance, especially for larger businesses.
Underwriting for Individual Policies
When you apply for individual private health cover, you'll typically face one of two types of underwriting:
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Moratorium (Mori): This is the most common type. The insurer will not cover you for any medical conditions you've had symptoms, treatment, or advice for in the 5 years before your policy starts. However, if you go for a continuous 2-year period after your policy begins without any symptoms, treatment, or advice for that condition, it may become eligible for cover. It's an "ask questions later" approach.
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Full Medical Underwriting (FMU): This involves completing a detailed health questionnaire about your medical history. The insurer will review your answers and may write to your GP. They will then explicitly list any conditions that are excluded from your policy from day one. It's an "ask questions upfront" approach, providing more certainty but also being more intrusive.
Underwriting for Group Health Insurance
Group schemes offer far more generous underwriting options, which is a game-changer for employees with previous health issues.
| Underwriting Type | Minimum Group Size | How it Works | Key Benefit |
|---|---|---|---|
| Medical History Disregarded (MHD) | Usually 15-20+ employees | The insurer agrees to cover eligible medical conditions, regardless of any pre-existing history. | The gold standard. Covers pre-existing conditions (subject to policy terms). No medical questionnaires needed. |
| Continued Personal Medical Exclusions (CPME) | 2-3+ employees | If an employee already has PMI, they can switch to the group scheme, carrying over the same exclusions from their previous policy. New members are underwritten separately (usually Moratorium). | Smooth transition for employees who are already privately insured. |
| New Moratorium Underwriting | 2-3+ employees | Works the same as an individual moratorium policy. The most common option for small groups. | Simple to set up, no lengthy medical forms. |
Medical History Disregarded (MHD) is the most significant advantage of a large group scheme. An employee with a history of, say, knee trouble or back pain that would be excluded on an individual policy could have it covered under an MHD group scheme. This is an incredibly powerful benefit that fosters immense employee loyalty.
Working with an expert PMI broker like WeCovr is crucial here. We can assess your company's size and needs to determine which insurers will offer MHD underwriting and help you secure the most inclusive cover for your team.
The Business Case: Why Invest in Employee Health?
Beyond the simple maths of cost, providing health insurance is a strategic investment that delivers tangible returns. In a competitive labour market, it's no longer a 'nice-to-have' but a core part of a compelling benefits package.
1. Attracting and Retaining Top Talent
In high-skilled sectors, a generous benefits package can be the deciding factor for a candidate choosing between two similar job offers. Private medical insurance is consistently ranked as one of the most desired employee benefits in the UK. Offering it signals that you are an employer who cares for the long-term wellbeing of your staff.
2. Reducing Sickness Absence and 'Presenteeism'
Sickness absence costs the UK economy billions each year. According to the Office for National Statistics (ONS), an estimated 185.6 million working days were lost due to sickness or injury in 2022, the highest rate since 2004.
PMI helps to combat this in two ways:
- Reduces Absenteeism: By providing fast access to diagnostics and treatment, PMI can significantly shorten the time an employee is off work. Bypassing potentially long NHS waiting lists (which stood at over 7.5 million treatment pathways in early 2024, according to NHS England data) means an employee can get their diagnosis and procedure done in weeks, not months or years.
- Reduces Presenteeism: This is the problem of employees coming to work while unwell, leading to reduced productivity. Access to private GPs, mental health support, and physiotherapy through PMI encourages employees to address health issues early, before they become chronic problems affecting their performance.
3. Boosting Morale and Productivity
When employees feel valued and cared for, their morale, engagement, and loyalty increase. Knowing they have a safety net for their health and their family's health reduces personal stress, allowing them to focus better at work. This creates a positive, supportive company culture that fosters collaboration and innovation.
4. Fulfilling a Duty of Care
Employers have a moral and legal duty of care for their employees' health and safety. While providing PMI goes beyond the legal minimum, it demonstrates a profound commitment to this duty. It shows you are proactively investing in their physical and mental wellbeing.
Tax Implications for Your Business and Employees
Understanding the tax treatment of group health insurance is vital.
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For the Employer: The premiums you pay for a group PMI scheme are considered a legitimate business expense. This means you can deduct the full cost from your company's pre-tax profits, reducing your overall Corporation Tax bill.
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For the Employee: The health insurance premium paid by the employer is treated as a 'benefit-in-kind'. This means it has a cash value that is subject to income tax. The value of the premium is reported to HMRC on a P11D form, and the employee pays tax on this amount through an adjustment to their tax code.
Example:
- A company pays a £600 annual premium for an employee's health insurance.
- The employee is a basic rate taxpayer (20%).
- The employee will pay £120 in extra tax over the year (£600 x 20%).
- For this £120, they receive private health cover that might have cost them £800-£900 to buy as an individual.
This makes it an exceptionally tax-efficient way for an employee to access private healthcare.
Beyond Treatment: The Rise of Wellness and Digital Health
Modern private health cover is about much more than just paying for operations. The best PMI providers now include a comprehensive suite of wellness services designed to keep people healthy and out of hospital.
These often include:
- 24/7 Digital GP: Video consultations with a GP at any time, from anywhere.
- Mental Health Support: Access to counselling, therapy, and digital cognitive behavioural therapy (CBT) without needing a GP referral. This is a huge benefit, helping to address issues like stress, anxiety, and burnout early.
- Physiotherapy and Musculoskeletal Support: Quick access to physio for back, neck, and muscle problems – a leading cause of sickness absence.
- Health and Wellness Apps: Tools for tracking fitness, nutrition, and sleep, often with rewards and incentives for healthy behaviour.
- Second Medical Opinion Services: The ability to have a diagnosis and treatment plan reviewed by a world-leading expert.
At WeCovr, we believe in this proactive approach to health. That's why clients who purchase PMI or Life Insurance through us also receive complimentary access to CalorieHero, our advanced AI-powered calorie and nutrition tracking app. We also offer discounts on other insurance products, providing holistic protection for you and your business.
So, Which is Right for My Business?
Let's apply this knowledge to some common business scenarios.
Scenario 1: The Small Start-up (2-10 Employees)
- The Challenge: A tight budget but a need to attract skilled talent in a competitive field. The team is small, close-knit, and the absence of one person is felt deeply.
- The Best Option: A small group PMI scheme is likely the best choice. While you might not qualify for MHD underwriting, a moratorium scheme is simple to set up and far more cost-effective than reimbursing individual policies. It establishes a fantastic company culture from day one.
- How a Broker Helps: A broker like WeCovr can compare the market to find a policy that fits your small budget, explaining the trade-offs between cost and cover level (e.g., choosing a higher excess to lower the premium).
Scenario 2: The Established SME (20-100 Employees)
- The Challenge: The business is growing. It needs to formalise its benefits to retain experienced staff and reduce the impact of sickness absence on its operations.
- The Best Option: A group PMI scheme with Medical History Disregarded (MHD) underwriting. At this size, your company becomes highly attractive to insurers. You can secure a policy that covers pre-existing conditions, which is an unparalleled benefit for your staff. You can also introduce different tiers of cover (e.g., enhanced cover for senior management).
- How a Broker Helps: We can negotiate with insurers on your behalf to secure MHD terms and the most competitive rates. We handle the market review and administration, saving you valuable time.
Scenario 3: The Freelancer or Sole Trader
- The Challenge: You are the business. If you get sick, your income stops. You have no employer to provide cover.
- The Best Option: An individual private medical insurance policy. This is a critical investment in your own health and business continuity. You can tailor the policy precisely to your needs, choosing the hospital list, excess level, and optional extras that matter most to you.
- How a Broker Helps: We can guide you through the personal underwriting process and compare dozens of individual policies to find the one that offers the best value for your specific circumstances.
Final Verdict: Group PMI is the Superior Choice for Most Businesses
For any business with two or more employees, group health insurance is almost always cheaper, better, and more strategically valuable than funding individual policies.
The combination of lower per-person costs, superior underwriting (especially MHD), and the positive impact on recruitment, retention, and productivity makes it a cornerstone of a modern, competitive employee benefits package.
Individual policies remain the essential choice for sole traders, freelancers, and those whose employers do not offer a group scheme.
Navigating the options can be complex, but you don't have to do it alone. The UK private medical insurance market is vast, and the right partner can make all the difference.
Does group health insurance cover pre-existing conditions?
Is group health insurance a taxable benefit in the UK?
Can a very small business get a group health insurance policy?
What is the difference between an acute and a chronic condition?
Ready to protect your team and grow your business?
Choosing the right health insurance is a crucial decision. At WeCovr, our expert advisors provide free, impartial advice to help you compare the UK's leading insurers. We'll find a solution that fits your budget, supports your people, and gives your business a competitive edge.
[Get your free, no-obligation quote from WeCovr today]
Why private medical insurance and how does it work?
What is Private Medical Insurance?
Private medical insurance (PMI) is a type of health insurance that provides access to private healthcare services in the UK. It covers the cost of private medical treatment, allowing you to bypass NHS waiting lists and receive faster, more convenient care.How does it work?
Private medical insurance works by paying for your private healthcare costs. When you need treatment, you can choose to go private and your insurance will cover the costs, subject to your policy terms and conditions. This can include:• Private consultations with specialists
• Private hospital treatment and surgery
• Diagnostic tests and scans
• Physiotherapy and rehabilitation
• Mental health treatment
Your premium depends on factors like your age, health, occupation, and the level of cover you choose. Most policies offer different levels of cover, from basic to comprehensive, allowing you to tailor the policy to your needs and budget.
Questions to ask yourself regarding private medical insurance
Just ask yourself:👉 Are you concerned about NHS waiting times for treatment?
👉 Would you prefer to choose your own consultant and hospital?
👉 Do you want faster access to diagnostic tests and scans?
👉 Would you like private hospital accommodation and better food?
👉 Do you want to avoid the stress of NHS waiting lists?
Many people don't realise that private medical insurance is more affordable than they think, especially when you consider the value of faster treatment and better facilities. A great insurance policy can provide peace of mind and ensure you receive the care you need when you need it.
Benefits offered by private medical insurance
Private medical insurance provides numerous benefits that can significantly improve your healthcare experience and outcomes:Faster Access to Treatment
One of the biggest advantages is avoiding NHS waiting lists. While the NHS provides excellent care, waiting times can be lengthy. With private medical insurance, you can often receive treatment within days or weeks rather than months.
Choice of Consultant and Hospital
You can choose your preferred consultant and hospital, giving you more control over your healthcare journey. This is particularly important for complex treatments where you want a specific specialist.
Better Facilities and Accommodation
Private hospitals typically offer superior facilities, including private rooms, better food, and more comfortable surroundings. This can make your recovery more pleasant and potentially faster.
Advanced Treatments
Private medical insurance often covers treatments and medications not available on the NHS, giving you access to the latest medical advances and technologies.
Mental Health Support
Many policies include comprehensive mental health coverage, providing faster access to therapy and psychiatric care when needed.
Tax Benefits for Business Owners
If you're self-employed or a business owner, private medical insurance premiums can be tax-deductible, making it a cost-effective way to protect your health and your business.
Peace of Mind
Knowing you have access to private healthcare when you need it provides invaluable peace of mind, especially for those with ongoing health conditions or concerns about NHS capacity.
Private medical insurance is particularly valuable for those who want to take control of their healthcare journey and ensure they receive the best possible treatment when they need it most.
Important Fact!
We can look at a more suitable option mid-term!
Why is it important to get private medical insurance early?
👉 Many people are very thankful that they had their private medical insurance cover in place before running into some serious health issues. Private medical insurance is as important as life insurance for protecting your family's finances.👉 We insure our cars, houses, and even our phones! Yet our health is the most precious thing we have.
Easily one of the most important insurance purchases an individual or family can make in their lifetime, the decision to buy private medical insurance can be made much simpler with the help of FCA-authorised advisers. They are the specialists who do the searching and analysis helping people choose between various types of private medical insurance policies available in the market, including different levels of cover and policy types most suitable to the client's individual circumstances.
It certainly won't do any harm if you speak with one of our experienced insurance experts who are passionate about advising people on financial matters related to private medical insurance and are keen to provide you with a free consultation.
You can discuss with them in detail what affordable private medical insurance plan for the necessary peace of mind they would recommend! WeCovr works with some of the best advisers in the market.
By tapping the button below, you can book a free call with them in less than 30 seconds right now:
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Who Are WeCovr?
WeCovr is an insurance specialist for people valuing their peace of mind and a great service.👍 WeCovr will help you get your private medical insurance, life insurance, critical illness insurance and others in no time thanks to our wonderful super-friendly experts ready to assist you every step of the way.
Just a quick and simple form and an easy conversation with one of our experts and your valuable insurance policy is in place for that needed peace of mind!