For employees and organization members
What is Group Insurance?
Group insurance covers a specifically defined group of people such as the employees of a company or the members of a professional association, society, union or other organization.
Group Insurance, especially group health insurance, is a key component of many employee benefits packages that a business provides for its employees. Group Insurance plans for each company or organization are customized based on the demographics of its employees or members.
How does Group Insurance work?
Group insurance coverage may be either compulsory, in which case no member can opt out of the insurance, or voluntary, in which each eligible member may decide within a given time limit whether or not to be included in the group Insurance.
While group insurance plans are generally uniform in nature, offering the same benefits to all members of the plan, many group insurance plans can be customized to offer benefits by the designation or profile of the covered members. For example, certain benefits such as the amount of disability payments may be based on the salary of an employee.
Many types of group insurance coverages are available through Alliance Insurance Agency Services, Inc. including:
Health Insurance, Dental Insurance, Term Life Insurance, Universal Life Insurance, Long-Term Disability Insurance, Short-Term Disability Insurance and Long-Term Care Insurance.
What’s the difference between Group and Individual Insurance?
Insurance provided to employees by an employer or by an association to its members is called group coverage. Insurance you buy on your own, and not through an employer or association, is called individual coverage.
A common difference between a group insurance plan and an individual insurance plan is that the premium cost for an individual on a group plan is not individually risk-based. Instead it is the same amount for all the insured persons in the group. For example, all employees of an employer receiving health or life insurance coverage would typically pay the same premium amount for the same coverage regardless of their age or other factors. In contrast, under individual health or life insurance coverage, different insured persons will pay different premium amounts for the same coverage based on their age, location, pre-existing conditions, etc.
In most cases, the cost of group insurance coverage to an individual is far less than what the employees of a business or members of an association would pay for a similar amount of individual insurance protection.
Another important difference between group insurance and individual insurance is that individuals who are covered under a group insurance plan are generally eligible to renew coverage while they continue to be members of the group, such as an employee of the business or member of the organization. Under individual coverage, the insurance company often has the right not to renew an individual health insurance policy, for instance if the person’s risk profile changes.
Why does Group Insurance typically cost less than Individual Insurance?
The insurance coverage costs for each individual employee or member is typically much less than if they purchased an individual policy. This is because grouping individuals together allows insurance companies to give lower rates to businesses and organizations by providing a large volume of customers under one policy plan.
The business or organization is, in essence, purchasing insurance on a ‘wholesale’ basis for its employees or members. Because of the volume, costs for the insurance company such as administrative costs and marketing are reduced, allowing the insurance company to reduce costs down the line to the the insured individual.
Types of Group Insurance offered by Alliance Insurance Agency Services, Inc.
Group Health Insurance
Group health insurance is employer sponsored health coverage for business owners and their employees. Group health insurance can also include the dependents of employees and the owners of the business. A group health insurance plan is a key component of many employee benefits packages that employers provide for employees. A majority of Americans have group health coverage through their own or a family member’s employer sponsored group plan. Group health insurance is also available for organizations and their members.
Costs for group health insurance can be paid completely by the employer or the organization or employers and employees (or an organization and its members) can share the costs. Group health insurance plans usually cost less for participants than individual plans that offer the same benefits. This is because the risk is spread over the entire group, rather than one person. If the cost of premiums is borne by the insurer, then they are fully deductible, while any benefit received by group members is tax free.
Group Dental Insurance
Group dental insurance is employer sponsored dental coverage for business owners and their employees. Group dental insurance can also include the dependents of employees and the owners of the business. Group dental insurance is similar to group health insurance (see above) but as the name implies, it specifically applies to dental work.
Group dental insurance can help to cover the cost of routine dental care, such as checkups and cleanings, as well as fillings, root canals, crowns, oral surgeries and more. Coverage can be customized to your business budget and goals.
Dental care can be costly, and many employees consider group dental to be an essential part of their benefits package. As one of the most used group benefits, group dental coverage can be a worthwhile investment for helping to attract and retain good employees.
Group Term Life Insurance
Term life insurance pays a benefit in the event of the death of an insured individual during a specified term. Coverage provides a benefit directly to the beneficiaries if the covered individual dies during the covered period. Group term life insurance is a type of life insurance coverage offered to a group by an employer, association or other organization.
As with most types of group insurance, group term life insurance is generally less expensive than individual policy coverage. For this reason, group term life insurance is often a key component in employee benefit packages.
With group term life insurance, individuals are not required to undergo medical underwriting to get coverage because the insurance company providing the policy pools the risk of all employees or members to adequately price the risk. Group term life insurance coverage is in place as long as the policy remains paid for by the employer and the employee continues to work for the company providing the benefit.
Employers or associations that offer term life insurance coverage often limit the total amount of coverage available to employees or members based on a variety of factors, such as time in service (or membership), annual salary or number of dependents. Amounts are limited because insurance companies do not collect health risk data from each individual under the policy.
Group Universal Life Insurance
Universal life insurance is similar to whole life insurance in that it offers a savings element in the policy in addition to a death benefit payment. The difference is that whole life insurance caters to long-term goals by offering consumers consistent premiums and guaranteed cash value accumulation while universal life insurance offers flexibility in the premium payments, death benefits and the savings element of the policy.
Group universal life insurance is offered on a group basis to employees (or members of an organization), allowing for a less expensive policy than what is typically offered to an individual. A group universal life policy is most commonly purchased by businesses looking to provide life insurance coverage for their employees.
Group Long-Term Disability Insurance
Long-term disability insurance (LTD) is income protection for when you can’t work. Long term disability insurance helps replace some of your income for an extended period when you cannot work at all or can only work part-time because of a disability. Long term disability insurance pays out over a long period of time, for years or even decades.
Group long term disability insurance is offered through an employer and can provide a steady stream of income to help cover essential expenses during an extended illness or after a disabling accident.
Direct monthly payments are made to the disabled employee as a portion of their salary paid directly each month. The length of time monthly payments are paid is determined by the policy but can be paid all the way to retirement age.
Group Short-Term Disability Insurance
Short-term disability insurance (STD) is similar to Long-term disability insurance (see above). Both help protect an employee’s income during extended work absences and can help employees pay the bills when they cannot work due to a covered claim. Both can be purchased on a group insurance plan.
The main difference is that Short-term disability insurance pays benefits only for a short period of time (up to one year) and Long-term disability insurance can pay benefits for years, even all the way to retirement age if included as part of the plan.
Short-term disability insurance benefits are paid after an employee runs out of sick leave. Depending on the plan, Short-term disability insurance generally will pay benefits for between 9 and 52 weeks (1 year).
Group Long-Term Care Insurance
Long-term care insurance (LTC or LTCI), helps provide for the cost of long-term care beyond a predetermined period. Long-term care insurance covers care generally not covered by health insurance, Medicare or Medicaid. Long-term care insurance will reimburse costs for care received at home or at assisted living or skilled nursing facilities.
An increasing number of employers, organizations and associations are helping their employees and members plan for the very real risk of needing long-term care by providing group long term care insurance. Long-term care insurance can also be offered to spouses, partners, parents and parents-in-law, as well as to retirees and even spouses of retirees.
Offering long-term care insurance to employees also has great benefits for a business. In addition to positioning your company as one that cares for its employees, long-term care insurance takes tremendous stress off employees who otherwise may be faced with the difficult task of caring for disabled loved ones. The benefits of long-term care insurance to an employee can result in less time missed at work, less stress on the employee and overall increased productivity by the employee.
What is the difference between long term care and disability insurance?
Disability insurance replaces a portion of your income lost due to an inability to perform your job. The qualifying disability may be job or task specific (unable to perform your particular job) or general (unable to perform any job). Long term care insurance pays for a portion or all of the costs of caregiving needed due to physical or cognitive disability.
Free Evaluation and Quotation
Contact a Commercial Insurance Specialist from Alliance Insurance Agency for a free Group Insurance Evaluation for your business or organization.
The information presented on this website is for general reference purposes only and does not override or serve as an addendum to any insurance policy or contract. Always consult your insurance policy or your Alliance Insurance Agency Services, Inc representative for accurate information regarding your policy and coverage.