As we mentioned in previous article, many corporations offer competitive packages, and that's even a strategy in hiring and retaining employees. These competitive packages include group insurance to plans that provide individual retirement accounts or traditional registered pension plans, etc. In this article, we will discuss fundamental principles and advantage of group insurance
Group Insurance exists for the benefit of the complete group and therefore the individual member is not required to submit medical information. Here are five fundamental principles of group Insurance.
A. Fundamental Principles
1. Employee must be active at work
If any employee is on disability leave, his/her coverages will not be effective until he/she returns actively to work. This guarantees the principles that all employees can be insured.
2. Non discriminatory insurance schedule
Employee can not pick or choose the type or size of their individual coverage. The master contract exists between the employer and the insurance company governs the details of the type and amount of coverage. The only choice the employee has, is whether to join or not and generally, the waiting period of between 30 - 90 days.
3. Employee contributions or deductions
Employee contributions or deductions are taken off their paychecks, and then combined with the employers share so that one check is remitted.
4. Mandatory employer contribution
Generally, the employer will pay one half of the premium billed each month, but sometimes may pay a larger percentage. If they pay 100%, this is known as a non contributor plan.
5. Spreading the risk
In order to ensure that the risk is spread over the entire employee group, the insurance companies require each group size has a minimum enrollment.
a) A small plan with 10 lives or less may demand 100% participation and request a health statement.
b) A medium sized group plan of 50 employees or more might require 85% participation.
c) A large group plan could require 75% participation.
B. Advantage of group insurance
1. Employer pays a substantial amount of the cost.
2. No insurability is required
3. premiums paid by the employer are tax deductible.
4. Employees have the right to convert the life benefit to a private plan when they terminate the plan.
5. On termination of employment, the group life remains in force for 31 days without charge.
6. Group insurance do not contain a suicide clause.
I hope this information will help. If you need more information, you can read the complete series of the above subject at my home page:
Kyle J. Norton
All rights reserved. Any reproducing of this article must have all the links intact. I have been studying natural remedies for disease prevention for over 20 years and working as a financial consultant since 1990