Group Insurance Benefits: Low-Cost Protection for Employees

Summary Group insurance provides benefits to a number of persons under a single master contract. Low-cost protection is provided because the employer pays part or all of the premiums. Evidence of insurability is usually not required. Larger groups are subject to experience rating, by which the group's loss experience determines all or part of the premiums charged. Certain underwriting principles are followed in group insurance to obtain favorable loss experience: - Insurance should be incidental to the group. - There should be a flow of persons through the group. - Ideally, the benefits should be determined by some formula that precludes individual selection of benefit amounts. - A minimum percentage of eligible employees should participate in the plan. - There should be simple and efficient administration of the plan. Most groups today are eligible for group insurance benefits. However, employees must meet certain eligibility requirements: - Is a full-time employee. - Has satisfied a probationary period (required in some plans). - Has applied for insurance during the eligibility period. - Is actively at work when the insurance becomes effective. Group life insurance typically providesyearly term insurance coverageto participating employees. Different coverage amounts are available. Abasic amountof term life insurance is provided to all eligible employees based on earnings, position, a flat amount for all, or some combination. Evidence of insurability is not required