Nature of Group Insurance and Types of Group Insurance12th May 2020
Characteristics of Group Insurance
“Life insurance offered by an employer or large-scale entity (i.e. association or labor organization) to its workers or members. Group life insurance is typically offered as a piece of a larger employer or membership benefit package. By purchasing coverage through a provider on a ‘wholesale’ basis for its members, the coverage costs each individual worker/member much less than if they had to purchase an individual policy. People who elect coverage through the group policy receive a ‘certificate of credible coverage’ which will be necessary to provide to a subsequent insurance company in the event that the individual leaves the company or organization and terminates their coverage.”
Thus we can infer the following characteristics of Group Life Insurance, which also apply to other group insurances:
- There must be a group of people to be insured who have something in common other than the purpose of obtaining insurance
- To save administrative costs, there is often a Master Policy Holder who will retain the documentation on behalf of the members, and may deal with the members on behalf of the insurer
- Such covers are typically available at a discount to the respective individual rates, as administration and expected claims costs are lower.
Insurable Groups can broadly be classified as mainly two types” employer – employee ” groups where all members work for the employer proposing to cover them or “affinity” groups, whose members have a commonality other than employment say deposit holders of a bank.
The Master Policy Holder of a Group Life Insurance Plan in the case of an “Employer Employee Group” is basically the Employer and for other groups would be the entity that has an insurable interest in the lives of its members. So in the case of a bank it could be said to have an insurable interest in the lives of its members who hold a deposit or have taken a loan. The Master Policy Holder also ensures each member gets their certificate of coverage stating the details of the premium paid, cover available, term of the cover and the claims process.
Types of Group Insurance Policies available in India
Group Term Life Cover
This type of policy offers a life cover to each member (insured) working in the group (organization). The premium is collected from the group owner which can be deducted from the salary of the employees on a monthly basis.
Group Health Cover
The group medical cover is to meet the unpredictable medical needs of each group member. This plan also covers pre-existing diseases along with the diagnosis costs. In some cases, it covers the maternity expanses, visionary treatment, and dental checkups too. This may function in the form of cashless card form or the reimbursement of medical expense up to the limit specified.
Group Personal Accident Insurance Cover
This policy compensates the insured group’s members in case they meet with an accident during their employment.
Workers Compensation Insurance
This policy covers all the employer’s liabilities under the Workers’ Compensation Act 1987. Employers like the construction units and manufacturing hubs must have this insurance policy, as workers (even if the number is less than 20) operate at a high risk of a fatal accident which may follow the partial or even complete disablement of their own selves.
Group Pension/Superannuation Plans
The pension plans are said to the best insurance cover because they promise the sense of safety and security. Something which promises a regular monthly income even after 60 is worth sharing the pride. There are different formats of a pension plan are the Provident fund, Gratuity, and Superannuation.
Public Liability Insurance
This is suitable for groups which are involved in direct public dealing or provide professional services to individuals. Such individuals can be held responsible for the results of their decisions made while providing the service and may face legal scrutiny and penalties. This insurance covers such expenses incurred by the insured group or its members.
Group Travel Insurance
Covers the hazards faced by travelers, including theft of documents and luggage. Can also include health cover for the group members.