Group health insurance basics: what should it cover for your team?

Somewhere between ten and fifty employees, most Indian companies buy a group health policy. It's often the first meaningful benefit beyond salary, and it's usually arranged by whoever also runs payroll and compliance, in a week when there are twenty other things to do. That's fine; the policy will do its job. But a few decisions made at purchase shape what your team actually experiences at a hospital, and they're worth making deliberately.

Sum insured per employee

The single biggest decision. Group policies typically offer a fixed sum insured per family, ₹2 lakh, ₹3 lakh, ₹5 lakh being common bands. Think about what a serious hospitalisation costs in the cities your team lives in, and whether the number would cover it. A lower base with a voluntary top-up option that employees can buy at their own cost is a structure many companies find workable.

Who counts as family

Employee only, employee plus spouse and children, or employee plus spouse, children and parents. Parental cover is the most valued and the most expensive; it also drives most of the claims. Decide it consciously, and if parents are included, check whether a co-pay applies to them, because it often does.

Day-one cover and waiting period waivers

One of the real advantages of group cover is that insurers commonly waive the waiting periods that apply to individual policies: pre-existing diseases covered from day one, maternity without a waiting period, first-30-day exclusion waived. These are negotiated terms, not automatic ones. Check that the waivers you expect are on the schedule.

Room rent, co-pay and sub-limits

The same three clauses that shape individual claims shape group claims. A room-rent cap with proportionate deduction, a co-pay for parents or for certain cities, and sub-limits on procedures are all common in lower-priced group products. None is wrong in itself; each should be a choice you've made and communicated to employees, not a discovery they make at the billing desk.

Maternity and newborn

If your team is young, maternity cover matters. Check the limit per delivery (normal and caesarean are often different), whether the newborn is covered from birth, and whether pre- and post-natal expenses are included.

Joiners, leavers and mid-year changes

Ask how new employees are added (and from what date), how exits are handled, whether premium for leavers is refunded pro-rata, and whether an employee can convert to an individual policy when they leave. The last point is easy to forget and much appreciated by the person leaving.

Renewal: why the premium moves

Group health premiums are driven substantially by the previous year's claims. A bad year on claims means a higher renewal quote; that's how the product works. What you can influence: the age mix and family definition, wellness initiatives that some insurers price in, and structuring choices like co-pays and room-rent categories. A renewal conversation should separate what you can change from what you can't.

Five questions to ask before signing

What is the sum insured per family and what would a serious hospitalisation actually cost our people? Which waiting periods are waived? Is there a room-rent cap, a co-pay or a sub-limit anywhere on the schedule? How do joiners and leavers work through the year? And which hospitals near our offices are in the cashless network? Get clear answers to those five and you've covered most of what matters.

Group health doesn't need to be complicated. It needs to be chosen on purpose, explained to the team, and reviewed each year against what actually happened.

Sources: IRDAI Master Circular on Health Insurance Products, 2024 (waiting periods, portability, cashless timelines); IRDAI guidelines on group insurance; Employees' Deposit Linked Insurance Scheme, 1976 (for the statutory life cover that sits alongside voluntary group benefits).