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Advantages of Group Insurance

Superior Benefits
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
Lower Costs
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
Customized Policy
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
Easy Administration
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

Benefits of Group Insurance

Unique Benefits

  • Benefits in group policies can be customized for various employee groups based on their relative place in the organization via designation, tenure and salary, or based on their life-stage via marital status and family size
  • Standard exclusions of an individual plan can be covered under a group plan. For example, suicide cover in group term life insurance, or pre-existing ailments in group health insurance
  • Customized add-ons can be bought. For example, off-shore cover for group personal accident insurance

Flexible Economics

  • Payment options in group policy can be suited to match the needs of the organization. For large policies above 2 Crore in premium , employers can pay via installments
  • Employer funded group policies are annually renewable. At the time of renewal, employers can rengotiate cost based on their loss trends, size and benefit structure.
  • Employers have a wide choice of insurance companies. More importantly, the insurer can be changed annually without loss of historically earned benefits

Employee Friendly Design

  • Employee benefits policies can be continued by the employee after leaving the firm. For example, group health insurance can be ported to an individual health insurance plan. Employee can then carry forward the lapsed waiting period
  • Old policies can be transfered to employees at original cost. For example, employer-employee life insurance, can be continued by an employee, if employer transfers the policy
  • Corporate insurance policies can offer supplementary cover at employee's cost such as top-up health insurance

FAQs

Group Insurance schemes available can be broadly classified in two categories, statutory and voluntary, which are as follows : -
Statutory –
  • Group Employee's Deposit Linked Insurance (EDLI)
  • Group Gratuity
  • Workmen Compensation
Voluntary –
  • Group Health Insurance
  • Group Term Insurance
  • Group Superannuation
  • Group Personal Accident Insurance
  • Group Travel Insurance

There is no standard number for all the group insurance policies. It depends upon the type of policy, statutory obligations and at the insurer's discretion. Group insurance can be formed with as few as 5 people in case of group health insurance or with 10 people for a group term life insurance. Workmen Compensation policy can be taken for even one employee.

Group insurance policy is usually taken by employers for his group of employees. A non employer-employee groups defined by IRDA's guidelines can also buy group policies such as health, term, accident for their members. Organization such as banks & NBFCs also offers group insurance for their credit card & account holders and loan borrowers.

Exclusions depends upon the terms and condition of the respective group insurance policy. For example, in a group health insurance, injuries caused due to any involvement in criminal act, cosmetic and plastic surgery are not covered. In a group personal accident insurance damages due to war, consequential loss of any kind and legal liability, natural death are not covered.

The claim process is different for various types of group plans. Broadly the process involves timely claim intimation, document submission as requested by an insurer, claim approval and finally the payment. Although, the process of every group insurance is different for instance in group health plan the claims are processed in two ways i.e cashless and reimbursement.

In order to ensure that claims are paid, one should reveal complete information such as existing policy details, claims taken in previous year, demography details of the group in group insurance such as group health. An employer is expected to disclose the exact nature of work in case of a group personal accident or workmen compensation insurance. Non-disclosure of information can lead to claim rejection. Timely and complete submission of claim documents is also a key for ensuring the claims get paid in the group policy.

Claim documentation required under group insurance is different as per the type of the policy. Below is the list of few common claim documents required :
  • Signed and filled claim form
  • Post mortem, FIR in case of an accidental death claims
  • All medical reports, bills, invoices and other documents in original for a hospitalization claim
  • Employee ID, Health cashless card and a Valid ID Proof

It differs as per the policy type. In case of a death claim, full sum insured is payable under a group personal accident insurance, group term life insurance, employee deposit linked insurance or in group gratuity insurance policy. In case of other group insurances such as group mediclaim, amount payable depends upon the benefit structured which got agreed at the time of buying of the policy and other terms of the insurance company.

Premium determination for a group policy depends upon various factors, broadly these factors are benefit design, sum insured, claim history and demography of the employees. For instance, the computation of premium in group life insurance cover is computed by multiplying the total sum insured into the per mile rate quoted by the respective insurer based on the above mentioned factors. For including add-ons in the group policy, insurance company would charge additional premium as per the type of add-on opted in the policy.

Adding or deleting of lives in a group policy is a straight forward process where the premium adjustment happens on the pro-rata basis. In case of deletion of an employee (subject to he/she hasn't taken a claim), premium will be refunded on pro-rata basis from the employee's date of leaving. Similarly for addition, premium would be charged as per the pro-rata period from date of joining of a newly joined. This is a monthly process and to keep the process smooth an advance balance is maintained with the insurer in a separate ledger called CD account.

In case of group policy bought for employees, only employer can claim the premium paid for the group insurance as a tax deduction. An employee is not entitled to any income tax exemption under any group of the insurance provided by an employer. Under an individual health insurance bought directly by an employee will get a tax exemption under Section of 80 D of the income tax.

There are various additional benefits available under a group insurance policy such as maternity benefits in a group health insurance plan, children education benefit in a group personal accident insurance, accidental death benefit rider in a group term life insurance plan etc. Insurers provide specific rates for additional benefits which gets loaded on base rate and then drives the final premium.

For a small to medium size enterprise, it is recommended to first go for a group health insurance policy for the employees. Reasons for considering a group mediclaim insurance includes absence of individual health insurance policy among young set of employees, rising cost of hospitalization, retention tool for the employer, superior benefits at a lower cost. An employer can also consider group accident and term life insurance for his employees which are more cost effective compared to group health insurance.

A group insurance policy is significantly better than an individual insurance plan in lot of ways. One of the key benefit in group insurance is to customize the benefit design which is suitable for the employees as compared to the individual plans which have a standard benefit design. Another key differentiator in group insurance is the cost effectiveness a buyer gets compared to an equivalent insurance plan bought individually at a fixed/higher premium.

Yes, there are few group insurance policies which are mandatory to have for an employer. One is group gratuity insurance, as per the gratuity act of 1972 an employer is liable to manage the gratuity funds and also has to pay the claims at the time of leaving of an employee after 5 years. Hence, to fulfill this requirement an employer can opt for a group gratuity plan. Another one is EDLI, where it is compulsory for an employer to offer a degree of life insurance to it's employees under PF rules. Both policies help plan for a statutory obligation. It is however not compulsory to buy these policies.

In case you already have group insurance policies, it is recommended to get your existing policy terms reviewed with our team in order to improve the benefits and reduce the cost. As most of the group insurance policies are of one year tenure, it is recommended to start the renewal process of your existing group policy atleast 1 month before the date of expiry. Please provide your communication details in the above section for our team to initiate the process.

Insuropedia

How can I structure a Group Insurance Policy for employees?

Depending on the homogeneity of the group members the organization may even have to purchase different policies for different work groups in the organization.
Employee compensation structure can follow any of the three approaches given below:
Flat Structure: All employees are given a similar kind of cover, irrespective of their role
Read More

Can You Buy a Group Insurance Policy for Your Group/Association?

You can buy a group insurance if there are members who are gathered together with a common purpose or engage in a common activity. Further, there are some other guidelines that should be considered to buy a group insurance, like:
1. Most of the group insurance policies about the employer-employee However, the group insurance
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What is Relevant Information in Group Insurance Proposal?

The following information is considered relevant for a group insurance proposal:-
  • Nature of Business
  • Nature of Activities of Employees
  • Location of the workers
  • Age of Employees
  • Any previous or existing group insurance employees are covered with
  • Any other historical incident which indicates the kind of risk faced by
Read More

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