Group insurance offers life insurance protection under group policies to various groups such as employers-employees, professionals, co-operatives, weaker sections of society, etc. It also provides insurance coverage for people in certain approved occupations at the lowest possible premium cost.
Group insurance plans have low premiums. Such plans are particularly
beneficial to those for whom other regular policies are a costlier
proposition. Group insurance plans extend cover to large segments of the
population including those who cannot afford individual insurance.
A number of group insurance schemes have been designed for various
groups. These include employer-employee groups, associations of
professionals (such as doctors, lawyers, chartered accountants etc.),
members of cooperative banks, welfare funds, credit societies and weaker
sections of society.
Many employees see group insurance coverage as a major perk for faithful
company service. The premium payments are usually deducted automatically
from the pay itself. Some companies will absorb the entire cost of the
policy as a benefit for employees. The main advantages of the group
insurance schemes are low premium and simple insurability conditions.
Premiums are based upon age combination of members, occupation and
working conditions of the group.
A major feature of group insurance is that the premium cost on an
individual basis may not be risk-based. Instead it is the same amount
for all the insured persons in the group. Another distinctive feature is
that under group insurance a person will normally remain covered as long
as he or she continues to work for a certain employer and pays their
insurance premiums. This is different from the individual insurance
policy where the insurance company often has the right to reject the
renewal of a person's policy, depending on his risk profile.