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Intrinsic value: find out why a group insurance policy is ideal

With regard to housing, a car or a personal loan, such a device proves to be a source of tremendous relief for the surviving family members.

The Covid-19 pandemic is devastating individuals, families, communities and various social and business organizations. In the absence of a strong and viable welfare system, the financial needs of the surviving family members are sadly left to chance. It is in such a situation that having a group insurance plan can provide some confidence.

In a group insurance plan, all members of a pre-existing group enjoy a single or gradual coverage under a single policy issued by the insurers. Employees of a particular company or members of a cooperative society or customers of a particular bank are considered to be the group providing insurance coverage.

Group bonus
Term insurance plans are generally available to eligible groups. Because the group’s premium rate is much lower than what an individual would pay for similar risk coverage, group members receive a much higher insurance premium for the same amount. For this purpose, insurers prefer large groups to very large ones, but for simple urgent insurance coverage, insurers consider a group of at least 25 people to be viable. The duration of the policy is one year, which can be renewed every year by a lump sum payment of the insurance premium by the main policyholder, that is, the employer in the case of a company.

All new employees or members are automatically covered by the group policy, and those who retire or leave the organization will no longer benefit from coverage from the effective date. The sum insured may differ for different categories of employees, and the insurance premium must be paid accordingly. Under group plans, riders also receive broader protections such as double accident or disability benefits.

Uninterrupted protection
Today, worker-employer groups also need riders with serious illnesses. Non-life insurance companies offer group health insurance plans in which the premium per person is much lower than what one would pay individually. Based on the experience of mortality, insurers reduce the insurance premium for several years or then offer higher risk coverage without increasing the insurance premium.

The advantage of this program is continuous insurance coverage over a long period of time without the need to provide insurers with multiple forms and even medical reports, as well as keep records of payment of insurance premiums, etc. There may be only one simple form required to register a candidate’s name.

The human contribution to the plan is carried out through an already existing system. For example, an employer subtracts the bonus amount from wages or makes a contribution from his income account. For groups of savings account holders, the premium is debited from the account each year and paid to the insurer.

Bank borrowers can also subscribe to the mortgage buyout policy by subscribing to collective schemes offered by the banks’ partner insurers. Joining such a scheme by paying a lump sum premium while borrowing or choosing to pay a premium in an additional amount with the IME ensures that in the event of the borrower’s premature death, the lender will not charge the wrong amount. balance of his heirs. The insurance company will reimburse the amount due on the date of death of the borrower. With regard to housing, a car or a personal loan, such a device proves to be a source of tremendous relief for the surviving family members.

The writer is a former managing director and CEO of Star Union Dai-ichi Life.

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