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Table of Content ·
Meaning of Group Insurance ·
Definition of Group Insurance ·
Features of Group Insurance ·
Importance of Group Insurance ·
Limitations of Group Insurance |
MEANING OF GROUP INSURANCE
Group insurance is the insurance of all the employees of a specific age group of the same employer, the contract of which is between the employer and the insurer. Under a group life insurance policy, several people can be insured through a single insurance policy. Group life insurance has two main attractions – first, it is cheaper than other types of insurance and second, it does not require medical examination. Through this an employer provides group insurance to his employees. Its conditions are generally the same as normal insurance. In this, the average risk of all the individuals is determined and the premium is taken on the same basis. This scheme was started in 1958.
Under group insurance, the group insurance institution establishes contact with the employer or representative of a specific community, presents its plan regarding providing insurance facilities to all the people of that community and after deciding the insurance terms, provides group insurance to the entire community. Takes. In this way, all the people of the community are insured together through a single insurance certificate. Group insurance has proved to be a boon for people engaged in various small jobs, such as rickshaw pullers, milk sellers, barber, carpenter, blacksmith, weaver etc.
DEFINITION OF GROUP INSURANCE
According to Frank Joseph Angell ”Group insurance is a plan for insuring groups of persons without individual selection of their lives."
According to the federation of insurance institutes of India “Group insurance is a plan of insurance which provides coverage to a number of persons under one contract.”
According to Mowbray and Blankshard “group insurance is an insurance of group of employees of a common employer under a contract between the employer and the insurer.”
FEATURES OF GROUP INSURANCE
1. In this, a group of employees working for the same employer are insured.
2. To get insurance under this, it is necessary to have a group of 10 employees. This insurance is subject to medical examination but if the number of employees is 50 or more, medical examination is not done.
3. In this, the corporation gives a master insurance letter to the employer in which all the conditions and facilities available are mentioned. Apart from this, a certificate is given to each employee.
4. Group insurance is usually done in lump sum but it can also be obtained in installments.
5. Only the employer has the right to sign the insurance letter.
6. Group bonds can be whole life, endowment or periodic.
7. If the insured person dies after leaving the eligibility category, the death benefit is not received.
8. Premium can be paid annually, half-yearly, quarterly or monthly, like ordinary insurance.
9. The employee can appoint and change the beneficiary to receive the insurance amount.
10. Under this, only those employees who have provided 6 months of continuous service to the organization and their age is between 18 years to 59 years will be insured.
11. Whether the insurance policy is with contribution or without contribution, the premium will be paid by the employer.
12. Every employee can convert his group insurance policy into individual insurance policy within a certain period i.e. within 31 days of his termination of service.
13. A certificate of insurance becomes undisputed after two years from the date of its issue.
14. If the
employee becomes permanently disabled before attaining the age of 60 years,
then on the expiry of the period of insurance or death, whichever is earlier,
the insured will receive all the benefits of insurance along with the benefits
from the date of disqualification.
Premium will also not be charged.
IMPORTANCE OF GROUP INSURANCE
1. Importance of insurance to salaried people of low income group - The benefit of group life insurance scheme is also available to those people whose income is very low and who are unable to get insurance individually. Its premium is quite low.
2. Insurance facility for ineligible persons - Group insurance scheme also provides benefits to ineligible and unhealthy employees who cannot purchase insurance individually but they also get insured along with some very healthy persons in the group. .
3. A means of employee welfare – Group insurance is an excellent means of employee welfare. When there is contribution-free insurance, the policy holders get insurance without interest and are free from worrying about their future.
4. Improvement in industrial relations – Implementing group insurance in any industry or organization improves the industrial relations of labor and capital because it significantly increases the safety of employees and increases the moral level and ability. As a result, production also increases.
5. Strong relationship between employer and employees – Group insurance scheme is an important means of meeting the demands of labor unions. By providing protection and security to employees, disputes within labor unions can be resolved and relations between employers and employees can be strengthened.
6. Increase in the efficiency of employees - Group insurance scheme creates a feeling of satisfaction among the employees due to which they consider the organization as their own and work for full cost and honesty. This increases the morale of the employees.
7. Fulfillment of social responsibility- At present, there is a practice of giving a fixed amount to the employees at the time of accident and illness by the employer. To get rid of this social responsibility, the employer provides group insurance to his employees and gets this insurance from the company.
8. Reduction in mobility of workers- Employees remain more satisfied with free and cheap insurance facilities. Due to this, they remain permanently in the organization and as a result labor turnover is reduced. Apart from this, due to the benefits of incompetence and accidents, their morale remains intact to do serious and difficult tasks.
Limitations of Group Insurance
There are some limitations of Group Insurance, the main ones being the following-
1. Temporary Nature – The nature of group insurance is temporary. The insurance ceases with the termination of service of the employee. Although there is an option to convert it into personal insurance (within 31 days of termination), this rarely happens in practice.
2. Increase in financial burden – The financial burden on employees who have already got their life insured increases by purchasing group insurance.
3.Dissatisfaction among high position and high paid employees - Employees in high positions and high salary have satisfactory insurance, hence they have no interest in group insurance.
TYPES OF GROUP INSURANCE
Group Life
Insurance
Group life insurance provides a death benefit to the beneficiaries of a covered member in the event of their passing. Typically, the coverage amount is a multiple of the employee's salary, and it serves as a valuable financial safety net for the employee's family during difficult times.
Group
Personal Accident Insurance
Group Personal Accident Insurance provides financial protection to a group of individuals against accidental injuries, disability, or death.
Group Term
Life Insurance
Group Term Life Insurance covers a group of individuals with a fixed sum assured for a specific period. It ensures financial security for beneficiaries in case of the policyholder's death.
Group
Health Insurance
Group health insurance offers medical coverage to members within the group. It may include hospitalization, outpatient services, prescription drugs, and preventive care. This type of insurance ensures that employees have access to healthcare services and can maintain their well-being.
Group Disability Insurance
Group disability insurance provides income replacement if a covered employee becomes unable to work due to a disability or illness. This insurance helps protect the employee's financial stability during periods of inability to work.
Group
Dental Insurance
Group dental insurance covers dental treatments and preventive care for the members of the group. It encourages regular dental check-ups and helps in maintaining good oral health.
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