Corporate group insurance

Control over policy

Unlike individual insurance, the contract of group insurance is held by the employer. The insured, in this case, is the company – its employees are protected because it is part of the “group”. Therefore, the master contract will continue to stand when one of the insured employees dies or leaves the group.

Depending on the employer, group insurance can be compulsory or opted in. The type of insurance plan, including the coverage and provisions, is usually decided by the company itself. However, in a voluntary plan, where participating employees have to contribute part of the premium, they are given some degree of freedom over the benefits.

Conditions applied

Usually, the underwriting process will be simplified and the risks will be evaluated as a whole. Some key factors include:

• How safe is the nature of business
• Workforce stability (high turnover leads to high administrative costs)
• Group size (economy-of-scale and diversification)
• Age and gender distribution
• Past claim experience

Insurers often impose some eligibility restrictions to minimise their exposure. Other than age and citizenship, the exclusion of part-time and on-probation workers is also very common. Some policies will have a clause stating that the coverage is only in force during work. That means if the incident occurs when the employee is on leave, it will not take effect.