Technical Life Insurance Information

Group and Individual Insurance Plans
The majority of the plans we have considered so far have been with applications for this insurance of individuals, either insuring themselves or another person.  This remains a key element in the field of life insurance, but group insurance is playing and increasing role.  This is especially so with employee benefit plans, where an employer provides a form of life insurance, often as an additional benefit supplementing salaries and wages.  Again, this is a complex area, but certain feature we may note:

1. Basic difference: the most obvious difference between individual and group insurances is that the latter covers a number of people under a single policy.  Sometimes this is called a master group insurance contract.
2. Contracting parties: these are the insurer and the group policyholder, usually an employer, but possibly a club or other organization insuring its members.  The persons within the group who are covered may be referred to as group insurance or sometimes group life insured of persons insured.
3. Different plans: plans may be contributory (where the employees or other persons insured pay a share of the premium) or non-contributory (where individual members do not contribute towards the premium).
4. Eligible groups: usually group insurance concerns a single employer, covering his staff members (called a “group), but the members of association groups (i.e. members of clubs, trade unions, sports associations, etc) formed for a purpose other than purchase of insurance could equally be considered eligible.  Besides, multiple-employer groups (consisting of the staff members of different companies) may participate in a single plan.
5. Underwriting: doing business “in bulk” means that the high degree of underwriting attention applicable to individual insurances is neither possible nor necessary.  Detailed individual information is usually not required with group plans.
6. Individual eligibility: eligibility is usually decided by the employer, and the usual criterion for admission to group coverage is known as an actively-at-work provision.  This requires that the individual was not only employed, but also at work (not ill or on leave) when the coverage became effective.
7. Coverage declined: an eligible person (particularly with contributory schemes) may initially decline the coverage.  Should that person change his mind later, evidence of insurability may be required (to counteract anti-selection).
8. Termination of cover: for individual persons insured, their cover may terminate upon ceasing to be eligible (leaving the employer or group) or failing to pay any required premium.  Some plans allow individuals to convert their previous group cover into individual coverage, often without proof of insurability but normally within a specified time period.