Group insurance is coverage provided to a group of people (usually more than ten members or employees), linked by a common factor such as employees of an employer, members of an association, or members of a superannuation fund.
It is a single policy that covers all members, and as they are collectively assessed as a group, cost savings and advantageous product features are generally available to all members. Group insurance considers the characteristics of the group as a whole to determine price and eligibility and applies underwriting principles to reduce selection risk and mitigate costs.
Group insurance has several unique features which distinguish it from individual or retail insurance: automatic acceptance levels, continuation options, premium experience rebate, rate guarantees, guaranteed renewable, simplified administration, and takeover terms.
What are the different types of Group Insurance?
There are various group insurance plans. Few of them are mandatory by the law, like Workmen Compensation Plan or Public Liability Insurance; others are voluntary. Nonetheless, voluntary plans have gained importance in almost every type of organization, big or small.
Some of the prominent types of group insurance are: –
- Group Term Life Insurance
- Group Health Insurance
- Group Personal Accident Insurance Cover
- Workmen Compensation Insurance
- Group Travel Insurance
- Group Pension or Superannuation Plan
- Public Liability Insurance
What are the benefits of Group Insurance?
Buying a group insurance plan can be rewarding for employers. Many companies and businesses prefer to cover their employees with group insurance as part of the overall compensation.
- The premium paid in group insurance is lower than that of a member’s policy. In addition, these plans reduce the insurance provider’s liability as the risk is spread across all group members.
- Group insurance helps enhance the loyalty of employees to the employer. A group member feels valued to be a part of the group and is likely to continue his association with the group for an extended period. In addition, these plans help employers create an employee-friendly workplace and positive work environment.
- Often, a group insurance plan covers family members of group members. For example, many group health insurance plans cover spouses, dependent children, and parents of the group member.
- Employers can claim tax benefits for paying premiums on insurance plans for their employees.
- Group members can claim tax benefits on the premium paid on group insurance on top-up insurance, i.e., if additional insurance is taken over the group insurance and where the premium for the top-up insurance is paid by the group member, i.e., the employee.
- Some group insurance plans can be converted into individual plans when a member leaves a group. In such a case, the member has to pay a conversion fee.
- Group members are not required to fulfill pre-requisite conditions. On the other hand, individual insurance plans often require the policy applicant to undergo a health check-up.
- In group insurance, employees and their family members are covered without waiting for most ailments. However, a retail or individual insurance policy usually has an initial waiting period of 30 to 60 days and the exclusion of pre-existing diseases for one to three years.
Conclusion: Group Insurance a Motivational and Bonding Factor in a Business Work Environment
Group insurance plans are not as costly as individual plans. This is because having many employees under one plan permits the insurer to club different costs, such as organizational, operational, and renewal, and distribute them among the individuals.
From an organization or business viewpoint, group health insurance has many advantages. Offering group insurance is considered a perk and will likely help to form a better bond between employers and employees. That bond is one of the ways everyone in a company manages to get more done and feel better about themselves and their working environment. Group insurance can play a significant role in all of that.
