Group insurance is a policy that covers a group homogeneous of people who share similar characteristics. It is usually common in the business environment, being offered by the employer to a group of its employees.
That is, group insurance is one that protects a number of people who have certain traits in common. Its most common use case is that of workers from the same company or who carry out the same job.
There are different types of group insurance, whether they are health, life, accident or retirement policies.
Types of group insurance
Among the types of group insurance, the following variants can be distinguished, depending on the risk covered:
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- Of health: Offers coverage in case of a health ailment, providing medical assistance.
- From accidents: It is activated when the insured suffers an injury that can even generate some type of disability.
- Retirement: You can offer a life annuity (for life) or temporary once the person passes retirement. It can be financed jointly between the worker and the company.
- Social security: It offers additional income to Social Security (when the country has this system, as in Spain). It can be activated in case of dismissal, disability or death of the employee.
Likewise, if we classify according to the number of people covered by the insurance, we have:
- Nominated: The group is not very large. When contracting this type of policy, certain data of the insured will be recorded, such as the work they perform.
- Nameless: It is aimed at a large number of people, depending on the work they do, for example. The beneficiaries are grouped anonymously, without detailing personal data.
In addition, there is the so-called collective agreement insurance that is intended for a group of workers who are carrying out work with very specific needs, for example, they may be exposed to a high risk (as in the case of mining).
Why take out group insurance?
This type of insurance is contracted because, by acquiring the policy collectively, the costs for the beneficiary are reduced. That is, the premium that must be paid is lower, compared to if it were purchased individually.
Another point to keep in mind is that the process to access compensation is faster, again, compared to individual insurance. That is, the activation of the policy is more efficient.
We must also point out that the insured can extend the coverage received to their relatives. This, of course, in exchange for an extra payment.
Finally, these insurances are sometimes the only alternative in case coverage focused on certain risks is required (as we saw in agreement insurance). In other words, there are policies that, because they are so specialized, are not available individually, but only in the collective modality.