In our last read, we saw about group insurance and its features. In this article, we will see the eligibility for group insurance.
Eligibility for Group Insurance:
Employer-Employee groups:
This group is the most important target group for the group insurance scheme. An employer is a word used for either a large company or a small firm. The only condition is that there should be a minimum number of employees (generally 15 - 20) in that company.
The employees of an organisation are treated as one group, to whom insurance is issued as a single unit. The individual beneficiary members of the group cannot choose the amount of insurance cover. The amount will be determined on criteria that are applied uniformly to all the members of the group.
Professional Associations:
These groups are formed to protect the interest of professionals like doctors, engineers, lawyers, chartered accountants, etc. Thus, these professional associations can avail the benefits of group insurance.
Co-operative Societies:
These are organisations that individuals manage for their mutual benefit.
Creditor-Debtor:
Under this group, the creditor, who has provided some loan to individuals, can take group insurance for covering the dues of debtors to safeguard his advanced loans. Examples can be banks, NBFCs (Non-Banking Financial Companies) seeking insurance cover for their customers' loans.
Weaker Sections of the Society:
Group insurance also targets the weaker sections of the society, who otherwise would not have been able to take advantage of insurance.
Eligibility Conditions in Group Insurance:
Formation of group: Insurance cover must not be the prime motive for the formation or existence of the group.
Minimum number: There should be a minimum number of members in a group generally, 15-20, or more persons may be adequate fr group insurance, and there may be no maximum limit.
Active at Work: The employee should be active at work on the date of insurance commencement, i.e., an employee should not be absent from duty due to sickness or any other reason for the last 6 months. The insurance will not be provided to such an employee till he joins duty.
Probation: Probationary period can range between 6 months to 1 year and depends upon the company's policy. Some companies provide group insurance only to confirmed employees after completion of probation. Some companies provide group insurance only to full-time employees or to employees above a certain grade.
Age Limit: Some companies have age limits for group insurance. It may be specified that an employee's age should be less than 60 years for group insurance, and he/she should have joined the organization before the age of 55.
New Employees: In a non-contributory scheme, all new employees who join the organization become eligible for group insurance. In a contributory plan, there may be a waiting period (usually a month) for the employee, after which he can join the group insurance scheme.
Cover Limit: The beneficiary will not be able to choose the amount of insurance cover. It will be determined on a criterion that can be applied uniformly to all members of the group. This takes care of the risk of anti-selection.
Administration: There has to be a single administrative organisation to be willing and able to act on behalf of the group. Normally this is the administrative officer of the employer or association.
So there you have it: The eligibility criteria for availing group insurance scheme.
Until next read,
You know the drill...
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