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.
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