Group Insurance Policy refers to the type of insurance which covers a ‘group’ of people instead of one individual. So, the only condition is for all members of one group to include in a single policy is that the group’s risk should be homogeneous.
The ‘Groups’ can be of two types:
- Formal Groups (Employer-Employee): The formal groups include organizations or companies. Wherein the employer buys the insurance plan to secure the members of his organization.
- Informal Groups (Non-Employer-Employee): Such groups include members of similar cultural or social organizations. Here the administrator of the group usually buys the insurance to cover the members of the group.
There are different types of group insurance policies available in the market. Some of the traditional group policies include Life term group Insurance cover, Medical Cover, pension schemes, and several other retirement benefits.
Case Study for Group Insurance Policy
The company RN enterprises have more than 500 employees working under them. However, the company offers group medical cashless cover to all its employees up to the extent of Rs. 400,000 per year. The annual premium (Rs. 220,000) is shared equally by both the parties i.e. the employer and the employee.
A travel company is organizing a world tour for a batch of 50 travelers. The tour includes some of the most famous tourist destinations around the world and will take about three months to complete. The company has also bought a group travel insurance which covers all the tourists for multiple hazards while they are on tour.