Group Life insurance is a comprehensive life insurance cover that is offered collectively to a group. In this scheme life insurance cover is given to a specified number of persons under a single contract, and the policy issued is a called the Master Policy. These schemes are generally offered to an employers to enable him to provide life insurance security to his employees at a cheap cost. To cite from LIC’s documentation of achievements ‘Tryst with Trust’ there are no records to show whether any group life insurance scheme was sold by a insurance companies in India before the formations of the Corporations. ‘Tryst with Trust’ further goes to record that the first ever group life insurance scheme in India was the one finalized by the Bombay region of the Corporation in 1957. The first group life insurance policy of India was purchased by Unichem Laboratories fro a total sum assured of Rs. 1, 82, 000 for the benefit of 122 employee.
Through individual employees may receive a certificate from the employer mentioning one’s inclusion in the group scheme the parties and professionals such as a doctors, lawyers, chartered accountants at all. Certain specified sections f the society like co-operative banks, welfare funds, credit societies and weaker sections of society are also offered group insurance scheme providing uniform cover the to the members. The basic feature of a group scheme is that as the group is considered as a single unit, there is no individual underwriting . On the other hand the underwriting is a group underwriting. For the purpose of group underwriting the company that offers the cover consider the insurability of the entire group and not that of the individual constituents of the group. Because of this, no individual proposal is received from the group members, and medical examinations is also dispensed with.
While considering a group for group insurance cover, the insurer considered the following. Movement of group members new additions and exits to the group. The homogenous nature of the group. Insurance cover should be incidental and not the main purpose of the group. As employers- employees groups generally satisfy the above criteria in a majority of cases group cover is offered to the employees of a company. To be eligible as a member was in of a group insurance scheme, the insurer may impose certain conditions. This is to ascertain the insurability of the member. The insurability criteria may comprise: Ensuring that the member was in active service at the time of commencement of risk under the scheme. Ascertaining that the member had completed a stipulated period of service with the employers.
Leave on medical ground had not exceeded the stipulated number of days. At its discretion the insurance company may waive any of the conditions stipulated above. Once the insurer finds the group an acceptable one, the group underwriting exercise begins.. The group is not underwriting for any unlimited sum. The insurer restrict the sum assured of the risk viable limit called the Free Cover limit (FCL) or No Evidence Limit. (NEL) . FCL is related to the size of the group and the average sum assured arrived on the basis of emoluments.
When the underwriter decides the FCL as Rs. 5,000, it means that the members could be given group insurance cover without any medical examination up to the that sum assured limit. If a cover is to be given group insurance cover without any medical examinations up to theat sum assured limit. If a cover is to be given for than the FCL, Then the member may have to produce evidence of good health for the excess of the sum assured ovre the FCL. The insurer may also impose a limit on the FCL for members who are aged above a prescribed level. As a majority of the group life insurance schemes are based on the One-year Renewable Group Term Assurance (OYRGTA) plan, the premium charged is very low, thereby making the scheme appealing. The unique advantage of a group scheme is that even persons who are impaired and could not be considered for life insurance under moral plans could be included subject to the member satisfying certain simple tests of the insurability . An example is the group insurance scheme for the visually handicapped launched by LIC in 1991, at Nashik in association with the National Association
of the Blind. (NAB)