Introduction to Group Term Insurance

Due to the recent advancement in technology, it has become easier to keep track of your physical fitness on the go. The list is endless; AI-backed apps on the phone that constantly monitor the heart rate, or other fitness apps with suggestions for daily step count. This is one side of the coin, where the awareness amongst people has increased. On the other hand, there has been a surge in the type of viruses and diseases which affect human beings. Since the pandemic, the healthcare sector has been at the forefront of the economy. The medical costs for treatments and surgeries have skyrocketed. It can be challenging if you encounter a severe illness. You may want to insure yourself to prevent a treatment cost from burning a hole in your pocket. Since the price can be very high, group term insurance is one of the most convenient methods to build a shield.

The group insurance plans are contracts formed by the insurer and the policyholder. The insurance protects the policyholders. The policyholder, in this case, is the organisation, and the policy is taken for the employee. All the employees of the organisation are eligible for group insurance. The employees do not have to make any specific application for insurance coverage. The organisation segregates the employees into various groups. The general principle used by the organisation is to divide the staff based on their role, level and number of years in the company. As an employer, you need to pay a premium cost to the insurance provider. The company charges the premium cost in exchange for their service. The insurance company will take care of hospitalisation expenses, medical bills and the daycare charges. hence can be viewed as a complete package.

Employees must furnish bills to the insurer and make a claim. All the original bills need to be maintained by the staff in an organised manner for the claim. There is an attractive option of opting for a cashless facility which allows the direct settlement of bills between the insurer and the hospital. The cashless facility eliminates the need for cash in a transaction. The hospital shares the treatment cost details with the insurer, and the insurer examines the bills before settling the dues. The amount varies depending on what option you choose while selecting a plan. It is also important to note that cashless facilities may not be available at all hospitals. Employees and employers must be aware of it and can enquire about availability with the insurer.

The organisation purchases insurance for its people to safeguard and care for their well-being. The insurance plans are valid for a year and are auto-renewed annually upon expiry. All the expenses incurred by the insured employee may be claimed annually or semi-annually. It depends on the terms and conditions agreed between the insurer and the employer. The insurance company will verify all the claims made by the employee to ascertain if the plan covers them.

As highlighted above, the parties discuss and agree upon the plans. It has no involvement of the employee except that they receive direct benefits. Even though employers form groups based on common characteristics of the employees, group insurance has a downside: employees do not have a say in it. The employer makes all the decisions; creating a pool of network hospitals, premium costs, and deductibles. Employers should note that the plan designed for the group may not be suitable for all the employees. There is a possibility that the plans may offer comparatively lesser or limited advantages to some employees. Hence, plans that have a scope of customisation should be selected. Customisation should be based on the needs and requirements of the employees. It can be expensive as the costs continually rise, so employers must assess the feasibility factor.

Uncovering The Cons Of Group Term Insurance

• It may fit a group but not everyone since it is based only on specific common characteristics.
• Customisation can be expensive.
• Group term plans may not always have an option to include employees’ family members.
• Group plans may not be appropriate for small industries as the costs may far exceed the benefits.

What Are The Exclusions?

As exhaustive as the group insurance plans may be, various factors fall under the exclusions category. It is essential to read through the exclusions before opting for a plan. Below are the standard exclusions listed under group term insurance plans:

• Diagnosis cost of a critical illness or severe disease
• Sex change operations, plastic or cosmetic surgery
• Weight management treatments and consultation charges
• Vision correction treatments through surgery
• Cost of treatments for infertility, including surrogacy and birth control
• Maternity costs for female employees
• Costs incurred for physical rehabilitation of employees due to drugs use or mental illness
• Surgery costs incurred due to involvement in war or other military situations or by use of destructive weapons

Specific conditions not covered under most of the group plans:

• Drug addiction, AIDS and HIV treatment costs
• Any medical costs incurred due to inflicting self-harm or an attempt to suicide, or other psychiatric conditions
• Insomnia treatment, speaking and learning difficulties and hyperactivity disorders
• Unani and homoeopathy medication costs
• Any kind of non-standard or unproven surgery costs which may be performed in an experimental stage
• Medical treatment costs incurred outside the purview of the insurance company’s region
• High-cost treatments like stem cell treatment and robotic surgery
• Injuries resulting from participation in any planned criminal act
• Dangerous and unfortunate accidents such as a snake bite or animal bite

Final Thoughts

Employees must take enough time to read through the policy document and reach out to their employers in case of any concerns. An employer must help employees understand how the policy works. Attention to detail will help employees avail of maximum benefits and can prove beneficial in the long run. Since many exclusions happen in rare situations, it may not be a cause of stress for many. Employees feel safe and secure when they are covered under a plan. They know their needs are being met, and their futures are secured. Despite exclusions, group term insurance is a good option that an employer can provide. It helps reassure employees and goes a long way in creating a positive work environment.