Group insurance policies
are certain plans of insurance which are offered to group of persons.
The group may be:
(a) Employer- employee
group, (b) Association of
professional, doctors, etc., ( C ) Members of Co-operative Banks / Credit societies. (d) Association of weaker sections such as
Rickshaw pullers, Railway porters etc., (e) Member of housing Societies. (f) Borrowers of housing loan from public sector undertakings. (g) Borrowers of Bank Co-operative Societies or housing societies.
Under group insurance a master policy is
issued as evidence of contract between the insurance company and another legal
entity which may be an employer, trustee, and an association.
The master policy
defines the group of lives to be covered
benefit if confers, the amount of contribution to be paid and other condition and
privileges of the participating group member. Group insurance is a group
selection process and not a selection of individual life. It is recognised that
every group will contain some proportion
of substandard lives but group under writing assumes that
the insurer is able to reasonably assess
the overall risk from the general nature
of the group. The group is
supposed to be homogeneous and contains
sufficient numbers so that the
number of claims to be homogeneous and
contain sufficient numbers so that the
number of claims by death can be
reasonably estimated on the basis of the
average. The amount of cover is determined on the basic of a formulas and is not
decided by individual forming the group.
Insurance on the lives of all members up to a limit called ‘Free cover
limit’ is granted on the basis of simple rules of insurability ‘. ‘Simple rules of
insurability means not absent from duty
on group of sickness on the date of
effecting insurance. Free cover limit does not mean free insurance premium. It
is free to the extent that no evidence of health is called for . As a result of ,ass
administration and simple underwriting
practice, group insurance becomes
a low cost insurance cover for a group. However the premium rates are
adjusted on the basic of experiences.
This is called. Experiences Rating . For medium and big sized group. sharing of
profits on the basis of years after taking into amount feature. If surplus is
generated over a period of years after
taking into account the premium collected and the benefit conferred the
rate of premium can be reduced in the future years. If on the other hand, it results in continuous is rated up.
Difference between Group
Insurance and individual insurance Group
insurance differs from individual
insurance on the following counts.
(1) Cover: A group of person is covered under the Group insurance. A
person’s life covered in individual insurance. (2) Contract: The Group
insurance is contract between the insurer and another legal entity, which may
be an employer, trustee and an association. The individual insurance is a
contract between the insured and the insurer.
(3) Medical Examination : No medical examination is required
for Group insurance. In Individual insurance, medical examination is necessary
in most of the cases. (4) Policy: A master policy is issued for Group insurance as against an individual
policy in individual insurance. (5) Sum
Assured : A fixed sum assured is paid for every claim under Group insurance.
The sum assured depends upon the premium
paying capacityof the assured in individual insurance.
(6) Premium: The premium under the Group
insurance is paid by the employer or employee or by both. The premium under
individual insurance is paid either by the assured or by the insuring
party. (7) Protection: The group
insurance is a social welfare scheme.
The individual insurance is a provision
for old age and for the family.
(8). Change of Assured: The individual is changed under the Group
insurance in case of retirement or death. No such change is possible in
individual insurance.
