Group Insurance - spreading the risk

Group Life and Health Insurance

(Life, AD&D, STD, LTD, Health)

Participation

Spreading risk amongst a group of individuals results in lower cost and higher limits of coverage without medical evidence. These benefits slip away if employees choose whether or not to participate and to what extent.

Pricing

Most contracts permit the insurer to adjust the premium rates, after the first policy year, by providing 30 days written notice to the policyholder. The practice of most insurers is to adjust rates annually by providing 30 days written notice to the policyholder.

Term of Contract

Most contracts can be terminated:

by the policyholder providing written notice prior any premium due date
by the insurer providing 31 days written notice prior to the policy anniversary date
by the insurer providing 31 days written notice for cause as outlined in the policy
automatically if the premium in not paid within 31 days (grace period) of the premium due date (first of the month)

Continuation of Insurance Coverage

Leave of Absence
Layoff
Notice/Severance
Disability
Death (survivor benefits)

First establish a human resource policy that specifies when benefits terminate. Next review all you insurance policies to ensure that each benefit contains the appropriate extension and termination clause.

Arranging Coverage

Employers (and other plan sponsors) use the expertise of a benefits broker or consultant to design and negotiate group benefit programs.

Caution is advised when changing underwriters or claims administrators.