Is Group Insurance Really Worth it?


What is group insurance? Britannica describes it as “insurance provided to members of a formal group such as employees of a firm or members of an association.”

Similarly, defines group insurance as “insurance coverage of a group under one master contract.” In this respect, it can be distinguished from individual insurance, where single policies are provided to just one person at a time.

If you run a business, you might have been told that offering group insurance to your employees would reap various benefits for the company itself. However, do such claims truly hold water?

How Does Group Insurance Work?

Key to the appeal of group insurance is that, as the insurer’s risk is spread across multiple policyholders, each of them can pay appreciably cheaper premiums on group insurance than what would be possible with their own, individual insurance plans.

Technically, the group insurance policy itself would belong to your company, with employees of it simply participating in the plan. Nonetheless, Investopedia warns that a group insurance plan will usually only be valid if at least 70% of group members participate in it.

This might not deter you, as a business owner, from taking out group insurance — especially as doing so could have surprising boons for your company.

Major Benefits of Offering Group Insurance to Your Workers 

One significant draw is simply the choice you would have when perusing the group insurance market. You might have heard of group life insurance, where a payout is made to help support dependents of a worker who has passed away while they were a policyholder.

There is also group critical illness cover, which pays out if the employee suffers one of the illnesses specified in the policy. YuLife offers group critical illness cover for cancer, heart attack, stroke and a wide range of other conditions.

Once you have added group insurance to the list of employee perks available from your company, you can publicise this particular benefit in job listings. Consequently, it could give you the edge when it comes to attracting in-demand talent.

Indeed, in the 1940s, employer-sponsored group health insurance plans were increasingly used by employers in attempts to attract employees while wartime legislation was reining in wages.

Having a group insurance policy on the table could also help your business with keeping hold of high-value employees. This would be especially applicable if the policy in question provides them with coverage these workers know they could too easily struggle to afford otherwise.

Are any of Your Workers Financially Struggling?

You might know at least some of them to be so. Still, during times of economic turmoil, you could yourself face difficulties in meeting ends meet — in which case, it isn’t beyond possibility that your business would lack enough financial leeway to fund any salary hikes for these embattled employees.

This helps to explain why taking out a group insurance policy and offering your recruits the chance to participate in it could prove a cost-effective way for your company to help look after their financial welfare.

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