Group insurance is basically an insurance coverage plan that covers a group of people who are the employees of a common employer, group of professionals or society members, etc; under one master policy. As the group insurance plan comprises of various contributors, the members get
coverage for more services at lower cost per member. There are various organisations that offer Group insurance coverage in addition to employers such as Labour unions, service groups, churches, etc. The group insurance plan can be obtained for participating members in the plan and their dependents.
Less Chances of Adverse Selection
Every participating member of a group insurance plan receives an insurance certificate that makes them eligible for receiving the benefits of the plan. Group coverage assists in minimizing the adverse selection with many eligible members of group purchase insurance for reasons unrelated to insurance. For examples, employees of a particular employer do not purchase insurance for any high risk factor but for only reason that they work for same employer.
Premium Not based in Risk
A common feature that is founds in most of the group insurances is that the premium cost is not based on the risk. In fact, the premium paid by every member is the same. For example, in case of group health insurance plan of a company, all the employees are under the same coverage and pay the same premium amount. They receive the same benefits irrespective of their age or other factors.
This is in sharp contrast to any individual health insurance coverage plan where premium amounts paid by two different persons are different for the same coverage and it is based on age, location, existing health conditions, etc.
Advantage for Individual members
Group Insurance plan allows the members to purchase or renew coverage during their association with the group subject to fulfilment of specific conditions. The payment of premium for a group insurance policy is manage by payroll department of company where certain portion of employee salary can be deducted towards premium payment or in some other cases company itself will bear the entire cost of policy as a means of benefit for employees.
The cost of premiums for various insurance coverage plans can increase significantly at any time. The benefits offered may be useful for certain individual members at the expense of other members. For example, in case of Group health insurance coverage plan, few individual members can receive the benefits for expensive treatments for certain pre-existing conditions as generally there are no physical exams are done on members prior to issuing a master policy. The rest of the group have to bear the higher premium costs over time.
Benefits
There are many insurance companies who provide varying benefits with their group insurance plans. Most of the plans cover emergency medical procedures such as hospital treatment for accidents or even routine medical check- up by doctor.
Some group insurance coverage plan extends the benefits of plan to employee’s spouse or dependents. Members can avail the free eyes and dental treatment; however it is subjected to certain specific conditions. Some group insurance plan covers prescription drug expenses; however others provide a co-pay provision where the covered individual has to make payments for name brand and generic medications.