In recent years, many people are finding that individual health insurance plans more closely meet their needs than employer-offered group plans. Individual plans are custom-tailored to suit the person, but they almost always carry higher premiums.

What's An "Individual" Plan?

An individual plan is a health insurance plan for those who are unemployed, self-employed, or choose to get their own insurance even though their company offers a plan.

The term "individual" just means that it's not part of any company. This means that your small business insurance plan, although only for you, maybe not be considered an individual plan. Likewise, an insurance plan for your whole family that is not connected to any business or employment situation is considered "individual."

With Individual Plans, You'll Pay More

Individual insurance plans' rates are always higher than group plans. It's sort of like buying wholesale; your company buys a whole bunch of plans and saves money, and you save money on it too. With an individual plan, the company is just covering you and your family, so they're charging exactly what they think it will cost to cover you.

Prices vary quite a bit with individual plans. You'll have to shop around for your individual insurance plan to find a good deal. The price offered by the two companies for the exact same plan may differ as much as 50%. This is because they set the price, based on their own expectations of your health needs. Rates also differ from state to state.

Although individual plans cost more, the price is going down as more people choose the individual option. This is a recent trend in the health insurance industry. Individual insurance providers have to compete with one another to offer the best deals, so it is becoming a better option for many people.

How Individual Plans Work

Individual insurance plans must be underwritten by a medical provider. This means that they will look at your medical record, assess the financial risks of covering you, and decide whether to underwrite it or not. With individual plans, you have to apply for the insurance plan and the provider has the option of flat-out rejecting your application if it feels the risk is too great.

They may also add on exclusions because of particular health problems that you have. The exclusions will cost more because they are added to the plan, but your provider has decided they need to be included. These exclusions may differ from one provider to another, so you can always look for another company who will take you on.

Your Health And The Cost Of Coverage

The main factor that influences your individual plan, especially the price, is your health. The older you are, the more you will pay. This is why group plans are especially advantageous to older people.

If you are in bad health or have an active medical condition that needs attention, the rates of your individual plan will rise accordingly. An individual plan will take into account your lifestyle habits, pre-existing conditions and other risks, and the price will reflect them.

Many people choose to go with a group insurance plan because individual health insurance plans tend to cost more. But, depending on your situation, an individual plan may be more suitable for you.