GROUP LIFE INSURANCE
Life insurance has become an ultimate need of every individual and groups to avert life risks which are uncertain and the risks that definitely will occur but the time and where it will take place is what is unknown to man.
As individual persons look for personal life insurances, groups also look for insurance policies for their members.
Group life insurances is a contract issued to cover a group of people who have one common interest besides their needs for life insurance. The contract is issued as a Master policy which contains names of all its members. The members write down changes from time to time due to
1. Entry of new members into the group and
2. Exit of members who die, resign from the group, those who retire, or any other cause which will occasion their exit.
The life insurance company or the insurer caries the risk of people who die untimely or premature death or disability who suffers critical illnesses or accident on the member of the group.
Group life insurance have in mind the financial liability the group or employers have to pay as death in service benefits to survivors of their employees who suffers such life risks. The financial safety needs of those who depend on their transaction with third parties like bank, suppliers or others.
Group disability income insurance sees the income requirements of its members during the period of their disability which also take care of group health.
CONTRACT OF GROUP LIFE INSURANCE HAS FEATURES
1. One policy is issued to the group which is called the Master Policy and its normally handled to the trustee of the group.
2. As long as the contract is renewed, the agreement or the contract remain in force without considering change in the membership of the group.
3. In this contract though members, have beneficial interest they are not part to the contract. It is between the group and the insurance company since the policy is issued to the trustees of the members.
4. In this contract the group has the obligation to pay premiums to the insurance company whether the premium is paid by both the group and the members or the group alone.
5. Beneficiaries are paid the benefit from the policy by the policyholders or the trustees of the group who hold that in trust though the benefit are paid by the insurance company.
6. With individual policies underwriting is very strict but with the group contract its easy.
GROUP INSURANCE HAS ITS PRINCIPLES
1. The group qualify to have insurance if they have a common purpose other than for insurance. In this vein the group must exist for common goal for example professional association of insurance officers coming together for keeping fit. Insurance should be a secondary matter.
2. The group should be large to reduce the number of people who wouldn’t have qualify for life insurance policy if they applied alone or as individuals. If the members are few uninsurable lives will have adverse effect on the insurance company.
3. Individuals should not be able to influence the size of their benefits. It should be on common basis so as to avoid anti-selection or adverse selection.
4. Older members should be replaced by younger ones as they go on retirement of dies.
5. Member enrollment should be compulsory if not, minimum percentage of those who are eligible must enroll as members.
6. Member who refuses to join at the initial stage of the contract but in good health must provide evidence that they are insurable when they want to join later to avoid adverse selection against the insurance office.
Group Life Insurance policies are of types and purposes which we have to delve into.