Page 108 - Group Insurance and Retirement Benefit IC 83 E- Book

Group insurance' is an insurance that covers a group of people, usually who are the

members of societies, employees of a common employer, or professionals in a common
group.

Group coverage can help reduce the problem of adverse selection by creating a pool of

people eligible to purchase insurance that belong to the group for reasons other than for

the purposes of obtaining insurance. In other words, people belong to the group not
because they possess some high-risk factor which makes them more apt to purchase

insurance (thus increasing adverse selection); instead they are in the group for reasons
unrelated to insurance, such as all working for a particular employer.

Group Life Insurance is defined as "Life insurance offered by an employer or large-scale
entity (i.e. association or labor organization) to its workers or members. Group life

insurance is typically offered as a piece of a larger employer or membership benefit
package. By purchasing coverage through a provider on a "wholesale" basis for its

members, the coverage costs each individual worker/member much less than if they had
to purchase an individual policy. . People who elect coverage through the group policy

receive a "certificate of credible coverage," which will be necessary to provide to a

subsequent insurance company in the event that the individual leaves the company or
organization and terminates their coverage

We can infer the following are the characteristics of Group Life Insurance

a. there must be a group of people to be insured which should have something in

common other than the purpose of obtaining insurance.

b. there must be a Master Policy Holder who will retain the contract on the behalf

of the member and the carriers

c. Such covers are typically available at a discount to the respective individual
rates.