Page 68 - IC23 life insurance application

INDIVIDUAL AND GROUP POLICIES:

An individual policy or personal policy is on the life of a single or at best two lives.

Each life to be assured is separately considered, for taking life risk. Each one fills up

a separate proposal. Medical examination, if necessary is done. Premium is

decided on the basis of age. Sum assured is paid on the death and/or survival

depending upon the condition of the plan. In case of a joint life plan, the sum

assured can be paid on the first death or second death or on both.

The group policy is based on a different basis. Here a group of people, normally

belonging to one employer, or one occupation are insured together. All the persons

on duty on the date of insurance are covered for a minimum sum insured, called free

cover. Nobody has to undergo any medical examination nor any proposal form is to

be filled in by the individual member. The employer or any other nodal agency fills

up the proposal form, which contains the name and age of each person covered by

this master policy.

Normally the employees of each category are grouped together to decide the sum

assured. Individual underwriting is skipped over, as it is expected that the entire

group shall make up for some unexpected early deaths.

However, if year after year, the insurance company finds that the total claim paid is

far more than the total premium collected, it has a right to increase the premium or

even not to agree to renew the cover next year. If there is a steady flow of new

comers, the average age can be maintained.

We shall discuss more of this in chapter 14.

Copyright Dr Rakesh Agarwal Sashi Publications Private Limited

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