What is group life insurance?
Group life insurance is a type of insurance which covers the lives of a group of people such as employees of an organization, members of co-operative, members of a labour union or even the individual members of a family. As per the terms of this insurance, all the individual policy-holders come under one ‘master group policy’, which is owned by the employer, the co-operative, the labor union or the head of the family, respectively.
The group members who get insurance as part of their employment benefits or individually pay for it have the option of naming beneficiaries and are provided with ‘Certificates’, which are subject to the Group Life Policy.
What are the advantages of group life insurance?
This insurance is usually cheaper than individual life insurance, as the insurance provider incurs a lesser cost.
As group insurance has a lower premium, they are more affordable to those who cannot afford individual life insurance. Thus, group insurance plans can offer cover large sections of the population, especially those who would not normally opt for life insurance.
In the case of this insurance, the premium cost is not based on the individual group-member’s risk factors. Instead, the premium is the same for all the insured persons in the group.
A major advantage of group policies is that all the persons within the group will be covered by the insurance company as long as they continue to pay the premiums. Unlike individual insurance policies, the insurance company does not have the right to reject a person’s coverage on account of his risk profile.
In most cases, the insurance companies do not ask the individual group members to undergo medical check-ups. Thus, those members who would be unfit for individual insurance would still be eligible for group life policies.