Do you remember when someone advised you to buy insurance? It’s essential to have protection because life is unpredictable. There’s always the possibility of incurring financial loss due to mishaps or illness. When you purchase coverage, you’re transferring the costs arising from those events to the insurer.
Coverage falls under two categories: life and non-life. You can easily choose a plan that suits your needs because, according to the National Association of Insurance Commissioners, there are about 5,965 companies in the U.S. If you want to protect more than one person, you can opt for group policies.
Here are some pointers to help you understand these plans. Consult an agent or broker for specific advice, or try this service.
What is Group Insurance?
This type of insurance refers to a single policy covering a particular group of people, such as employees of a company or association members. The owner of the plan is the employer or the consortium. Businesses can offer coverage to the whole organization, or only management staff and key personnel.
Benefits of Group Insurance for Companies
There are many advantages for employers to protect their employees, such as:
- They're creating a positive work environment. Workers are grateful because they get the coverage they need, which some cannot afford. A happy workforce means higher productivity.
- They gain increased loyalty. People are more likely to remain with the company for the long term because they’ll lose their benefits when they leave.
- Businesses enjoy huge savings. With low employee turnover, establishments incur lesser hiring costs. There are also fewer interruptions to the workflow.
- Tax rebates. Depending on state laws, the premiums paid may result in lower taxation liabilities.
Types Of Group Insurance
There are three main types of group insurance.
Group Health Insurance
Group health insurance plans provide medical coverage to company employees and association members. The premiums are lower because a big pool of people shares the risk.
While there are differences, most policies are similar in the following aspects:
- There has to be a 70% participation rate.
- The employer and employees split the premiums.
- Inclusion into the policy must be optional and not compulsory.
- For an additional cost, family members and dependents can join the plan.
Group Term Life Insurance
Group term life insurance provides financial security for the employee’s family in the event of their death. The sum insured will be paid to their dependents.
The key features of this type of plan are:
- Premiums for the coverage are cheaper than for a single policy.
- The application process is quick and easy.
- At least 50 people must sign up. However, the owner can add members during the year.
- Upon the employee’s death, their beneficiaries will receive a predetermined amount.
- There’s an option for coverage for critical illnesses, accidental death, and disability.
Group Personal Accident Insurance
Group personal accident insurance provides comprehensive financial protection in the event of disability or accidental injury.
The characteristics of this scheme include:
- The plan covers all costs resulting from accidents
- The insurer will pay 100% of the insured sum to the beneficiary in the event of the insured’s accidental death or loss of a limb
- When there is partial incapacity, the casualty will receive 50% of the policy benefits
- If the condition is temporary, compensation will amount to a pre-agreed percentage of the total coverage
- Some personal injury policies also cover heart attacks and strokes
These are the primary factors to review if you’re an employer planning on providing insurance coverage to your employees. You should also consider the advantages of offering such benefits as part of your hiring package.