How can I structure a Group Insurance Policy for employees?
Life insurance offered by an employer or large-scale entity to its workers or members
Group insurance is an insurance that covers a group of people, for example the members of a society or professional association, or the employees of a particular employer for the purpose of taking insurance.
Group coverage can help reduce the problem of adverse selection by creating a pool of people eligible to purchase insurance who belong to the group for reasons other than the wish to buy insurance, which might be because they are a worse than average risk.
Grouping individuals together allows insurance companies to give lower rates to companies, "Providing large volume of business to insurance companies gives us greater bargaining power for clients, resulting in cheaper group rates."
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.
Advantages of Group Insurance
Several benefits provided under a group insurance plan are either not available in an individual insurance or are available with restrictions e.g., pre-existing diseases cover from day 1
Group insurance plans allows a company to customize insurance benefits. For example, you can cover maternity benefits in a group health insurance plan with or without a waiting period
A group insurance plan leverages economies of scale to offer better coverage for a relatively lower premium than an individual insurance. Costs could be upto 50% lower than individual plans
Buying and maintaining a group insurance plan is siginificantly easier than managing multiple individual plans for employees. For example, waiver of medical underwriting for individuals
It can provide for outstanding dues or loans (like home loans) of participating memberson death or disability.
Benefits of Group Insurance Plans
- You can avail tax benefits* on the premiums paid for the Group Insurance plan
- These plans offer you an opportunity to secure the members of your organization
- These plans can be used as a tool to provide incentives to the members of your organization
- As an employer, you can meet your statutory obligations and also earn returns on them
- Premium can be charged to the members or paid by the group.
- The cover can cease if one leaves the group.
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