Page 187 - IC38 GENERAL INSURANCE

Notes:

IRDAI has laid down conditions for granting of group accident and health covers.
This protects individuals from being misled by fraudsters into joining invalid and
money making group policy schemes.

Recently introduced government health insurance schemes and mass products
can also be classified as group health covers since the policies are purchased for
an entire segment of the population by the government.

Definition

Group definition could be summarized as below:

a) A group should consist of persons with a commonality of purpose, and the
group organizer should have the mandate from a majority of the members of
the group to arrange insurance on their behalf.

b) No group should be formed with the main purpose of availing insurance.

c) The premium charged and benefits available should be clearly indicated in
the group policy issued to individual members.

d) Group discounts should be passed on to individual members and premium
charged should not be more than that given to the insurance company.

2. CORPORATE BUFFER OR FLOATER COVER

In most group policies, each family is covered for a defined sum insured, varying
from Rs. One lac to five lacs and sometimes more. There arise situations where
the sum insured of the family is exhausted, especially in the case of major
illness of a family member. In such situations, the buffer cover brings relief,
whereby the excess expenses over and above the family sum insured are met
from this buffer amount.

In short the buffer cover would have a sum insured varying from Rs. ten lacs to
a crore or more. Amounts are drawn from the buffer, once a family‟s sum
insured is exhausted. However this utilization is usually restricted to major
illness / critical illness expenses where a single hospitalization exhausts the sum
insured.

The amount that could be utilized by each member from this buffer is also
capped, often up to the original sum insured. Such buffer covers should be given
for medium sized policies and a prudent underwriter would not provide this
cover for low sum insured policies.

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