A

Project Report on

Group Insurance - A case study

SUBMITTED TO:

Mr.Y.Paparao

(Faculty of Insurance Law)

SUBMITTED BY:

Rahul Mandavi

SECTION-A

ROLL NO. 125

SEMESTER-X

HIDAYATULLAH NATIONAL LAW UNIVERSITY, RAIPUR (C.G.)

DATE OF SUBMISSION: 6th April, 2018

 Declaration

I, Rahul Mandavi, hereby declare that, the project work entitled, ‘Group Insurance-A case
study’ submitted to H.N.L.U., Raipur is record of an original work done by me.

Rahul Mandavi

Roll No. 125

Batch XIII

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 Acknowledgements

First and Foremost, I take this opportunity to express my profound gratitude and deep
regards to my teacher Mr. Y.Paparao, faculty Insurnace Law, for his exemplary guidance and
encouragement throughout the course of this project. The blessing help and guidance given
by his time to time shall carry me a long way in the journey of life on which I am about to
embark.

I also take this opportunity to express a deep sense of gratitude to IT lab staff and
library staff for their cordial support, valuable information and guidance which helped me in
completing this task efficiently.

Lastly, I thank almighty, my family and friends for their constant encouragement and
help without which this assignment would not be possible.

Rahul Mandavi

Roll No. 125

Batch XIII

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Table of Contents
Declaration ................................................................................................................................. 2

Acknowledgements .................................................................................................................... 3

Introduction ................................................................................................................................ 5

Objectives .................................................................................................................................. 6

Research Methodology .............................................................................................................. 6

THEORETICAL VIEW............................................................................................................. 6

IMPORTANCE OF GROUP INSURANCE: ........................................................................ 7

FEATURES OF GROUP INSURANCE: .............................................................................. 9

TYPES OF GROUP INSURANCE PLANS: ........................................................................ 9

GROUP INSURANCE - A CASE STUDY ........................................................................... 12

SOCIAL SECURITY SCHEMES: .......................................................................................... 13

CONCLUSION ........................................................................................................................ 16

BIBLIOGRAPHY: ................................................................................................................... 17

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 Introduction

Insurance can be defined as the process of reimbursing or protecting a person from contingent
risk of losses through financial means, in return for relatively small, regular payments to the
insuring body or insurance company.

Insurance involves pooling funds from many insured entities (known as exposures) to pay for
the losses that some may incur. The insured entities are therefore protected from risk for a
fee, with the fee being dependent upon the frequency and severity of the event occurring. In
order to be insurable, the risk insured against must meet certain characteristics in order to be
an insurable risk. Insurance is a commercial enterprise and a major part of the financial
services industry, but individual entities can also self-insure through saving money for
possible future losses.

In the good olden days, the farming community used to live almost self sufficiently. In the
hours of crisis the members helped each other. When the family head temporarily stayed back
from farming operations owing to sickness, the other members of the family automatically
took care of him. Industrialization has dramatically changed the way of life around the world.
There was rapid growth growth in new industries and the existing industries looked to expand
domestically and internationally. Industrial revolution brought opportunities as well as
threats. The immediate advantages were development of new tools and technological
advancements, innovations in production methods, mechanization of activities, large scale
operations, cost reductions, cost efficiency, creation of colossal employment opportunities,
evolution of new knowledge and emergence of new professions. On the other hand, the
concept of social security in the form of joint family system was slowly getting eroded. Self –
dependence and self – sufficiency were lost when people started migrating from farms to
factories. The concept of nuclear family took birth and people started feeling socially and
economically insecure. In the process every member of the society was compelled to work to
gain economic independence.

Though, life insurance offers protection to the family in the event of the unfortunate death of
the life assured, it is also true that majority of the population cannot afford to buy sufficient
insurance cover. That’s where, group insurance steps in. Collection of people as a group,
union, corporation or trade association brings out the “power of members” to bargain for a
good price. Hence, group insurance extends insurance coverage at an affordable price to

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many. Even employers get encouraged to provide a welfare package through group insurance
schemes to their employees.

Objectives

I. To study the benefits of group insurance to customer.

II. To study different schemes under group insurance.
III. To know the group insurance schemes provided by Life
IV. Insurance Corporation of India.
V. To study the eligible groups for group insurance coverage.

Research Methodology

Non empirical research work has been used in this project as the material in this project
mainly consists of the work of people which is already done. Some potions of that work are
referred in this project and citations are also provided wherever they were necessary.

THEORETICAL VIEW

Industrial Revolution became major source for spreading earlier the concept of group
insurance. Majority of the factories employed huge machineries, and working with them
more often led to accidents resulting in injuries, disablements, and deaths. Hence, a need for
social protection was felt by individuals who suffered from the occupational hazards and
accidents. This need for providing variety of benefits on a cost effective scale gave a boost to
group insurance. Low cost and liberal underwriting norms unlike those followed in the
individual insurance led to phenomenal growth of the group insurance. Hence, those
individuals who were denied individual insurance could get insurance protection on group
basis.

With the passage of time, different types of group insurance policies based on combination of
benefits decided for employee by the employer and state emerged. Some of the benefits were

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payable on untimely death, while some benefits were payable on survival. Similar to the two
basic plans in the Life Insurance i.e., term assurance and pure endowment, the Group Life
Insurance and Group Superannuation Schemes can be combined in a multiple number of
ways to form new schemes in order to meet growing demands.The concept of group
insurance emerged and flourished in the western and developed countries, while it took a late
start in India. Major developments were observed only after independence, though in the
initial years, the group insurance market was not amenable to this kind of benefit to
employees. However, with gradual realization of importance of group insurance, and
demands by trade unions, a sudden rise in business was noticed. Group insurance has almost
become an indispensable part of the employee benefit package. Group insurance has indeed
made great contribution to the society as could be seen from the following:

• Providing insurance facilitates to the small enterprises, where the employees are
not able to purchase the individual insurance policy.
• In the world of increasing cost of living, group insurance is helping organizations
by providing insurance facilities at lower cost.
• Group insurance offers insurance coverage to unlimited number of employees
under the same contract; this makes it accessible to all types of organizations.
• Employers are nowadays more concerned with high productivity and morale of
the employees. Thus, group insurance has become quite handy to the employers in
offering healthcare coverage as employee benefits at a lower cost.
• Group insurance under the same umbrella provides various products of life,
accident and health insurance, which would ultimately help employers, retain
employees and their high productivity.

IMPORTANCE OF GROUP INSURANCE:

Group insurance has changed the picture of the whole insurance industry. Because of
different insurance products, it has been a blessing for both the employers and the employees.
It offers an element of certainty to employees by comforting the people affecting by ill health,
disability, unemployment and even premature death, etc., at an affordable price.

Benefits to the Employees:

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Employees have been the major gainers of group insurance, which has increased the scope of
employee benefits manifold.

• Low Cost: The major benefit derived by the employee under group insurance is
the low cost of policy as compared to the individual insurance policy. This is
feasible due to large number of employees under the same insurance policy that
ultimately reduced the administrative costs.
• Employee Benefit Plan: Group insurance is the most popular employee benefit
plan in the foreign countries. A large section of the working class is found to be
unable to obtain an individual insurance policy for oneself/one’s spouse/family
because of its high cost. Thus, it depends solely on the employer to fund its
insurance policy.
• Flexibility: The concept of group insurance is applicable to all the sections of
society and industry. This aspect of group insurance has made it popular among
different groups like trade associations, etc.
• Tax Deductions: The employee under the group can avail the benefits of tax
deductions by contributing to the group insurance policy.

Benefits to the Employers:

Group insurance has become an essential employee benefit, and has helped employers in not
only improving the productivity of the employees but also employee morale in the
organization.

o Retention: Many organizations provide group insurance to their employees in

the form of an additional benefit to retain them for a longer period. Group
insurance benefit not only increases the retention ratio among the employees,
but also their productivity and morale.
o Public Image: An organization can always promote its public image through
group insurance schemes and thus, attract the major productive cream of the
market.
o u/;Tax Benefits: By providing the group insurance benefit plan, whether
contributory or non-contributory, to the employees, the employer can avail tax
deductions under the taxation rules.
o Size of Organization: Group insurance is beneficial to all types of
organizations, irrespective of size and number of employees.

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FEATURES OF GROUP INSURANCE:
o Master Contract: In group insurance, large number of employees, belonging to
a homogeneous unit are insured collectively, under a “master policy or a
contract” for the whole group. The master contract is issued to the employer,
while the employees receive “certificate of insurance”.
o Premium Payment: On the basis of premium payment, group insurance is
divided into two categories, contributory and non-contributory. To obtain the
benefits of high productivity, organizations prefer to take the non-contributory
policy by paying fully by themselves or both the employer and the employee
sharing the cost as in the case of a contributory policy. In both the cases the
employer gets the benefits of tax deduction to the extent of his contribution
towards the premium.
o Determination of benefits: The insurance company has to decide the method
of determining the benefits in a way that individual selection both by the
employer and the employee does not generate conflicts. Thus, the employer
needs to determine a formula or a specific level of salary or position that forms
the basis for determination of benefits.

TYPES OF GROUP INSURANCE PLANS:

Several kinds of group plans are being offered by the insurance companies but the following
are the more common kind of plans available in India and abroad:

o Group Term Life Insurance: Group life insurance schemes aims at providing
insurance coverage to employees. These plans are usually renewable annually.
The scheme may be contributory or non-contributory depending on the
employment conditions. In case of contributory scheme, the proportion of
premium shared by employee is deducted from the salary of concerned and
together with contribution of employer is paid to the insurance company.
o Group Supplemental Life Plans: The Supplemental Life Plans or optional life
plans offer additional insurance benefits beyond the basic benefits provided
under the group term life plans. The premiums are usually shared by employer
and employee. The premiums under these plans are usually dependent on age
of the employee with brackets of five years. Medical coverage is also provided

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 though members need not undergo a medical check-up, and a declaration of
good health from the members is considered sufficient.
o Group Accident Insurance: The Group Accident Insurance plan is a modified
version of the basic term assurance plan, which provides coverage against
accident risk to the member. Here, the insurance amount is paid on total and
permanent disability or death of the member caused purely due to accident. On
temporary disability, regular income for the period of unemployment is
provided. The coverage is usually extended full time i.e., non-occupational
and twenty four hour basis. In most cases the premium is fully borne by the
employer.
o Group Credit Life Insurance: The Group Credit Life Insurance plan is a
modified version of the Group Term Life Insurance plan, which offers death
benefit that is equal to the outstanding debt amount of the member. These
plans are most popular in the banks, which lend huge money and the credit
risk assumed by them. The member under the policy is usually the creditor
who takes loans from the lender. The lender can take a group credit life
insurance plan on the lives of his debtors, and the premium is borne by lender
on non-sharing basis.
o Group Disability Income Insurance: Group Disability Income plans intend to
provide periodical income during the loss of income caused due to disability
like, accident or sickness. These plans help a member to meet his/her basic
financial needs caused due to unfortunate event. Determining the amount of
disability stands as a challenge for the insurance company. The group
disability plans are issued on short-term and long-term basis.
o Group Gratuity Scheme: According to the provisions of the Act, every
employer needs to pay gratuity on retirement or death of an employee at a rate
of 15 day’s salary for every completed year of service rendered. An employer
has got option on the creation of a trust, to either manage it privately or enter
into an agreement with an insurance company for its management. Here, an
employer creates a trust, and the trustees enter into a group gratuity scheme
with a life insurance company. The trustees delegate the management of the
trust, the life insurance company, and on such delegation, insurance company
takes care of the administration, investment and periodical valuations of the
fund.

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o Group Superannuation Scheme: The superannuation schemes were developed
with an intention to provide post-retirement income to the employees. In India,
these schemes were introduced much later, while in western countries they
where available from the beginning of this century. A well designed and
managed group superannuation plan can provide a considerable amount to an
employee, without the employer prone to much complications and hardships.
o Group Leave Encashment Scheme: A Group Leave Encashment Scheme
provides employers a method to fund the leave encashment liability of their
employees. An advantage of the scheme is that employer/trustees need not
bother about investment of funds and actuarial valuation. Insurance companies
also offer death benefit under the schemes. Employers need to pay the
contributions in the form of premiums to the insurance company. This is
mainly non-contributory scheme. The insurance company pays the leave
encashment amounts as and when an employee retires.
o Group Disability Scheme: Disability is defined as the inability of the insured
employee to perform the duties of his job, owing to any occupational or non-
occupational injury, accident or sickness. Disability insurance provides
security in the form of stated amount of periodic income against loss of
income owing to an insured’s inability to work due to a disability, illness or
accident. Such coverage could be had either for disabilities due to accidents
alone or accidents and illness.
o Group Health Insurance: A couple of health insurance schemes are available
in India, which are offered by public and private insurance companies.
o Group Mediclaim Scheme: The group mediclaim scheme is available to any
group/association/institution/corporate body of more than 50 persons,
provided it has a central administration point. Only one policy is issued for the
entire group. It is not permissible to issue any unmanned group policy.

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 GROUP INSURANCE - A CASE STUDY

Group Insurance Scheme is life insurance protection to groups of people. This scheme is
ideal for employers, associations, societies etc. and allows you to enjoy group benefits at
really low costs.

1) Group Term Insurance Schemes:

o Nature of the Scheme: Group Insurance Scheme is meant to provide life

insurance protection to groups of people. Administration of the scheme is on
group basis and cost is low. Under Group (Term) Insurance Scheme, life
insurance cover is allowed to all the members of a group subject to some
simple insurability conditions without insisting upon any medical evidence.
Scheme offers covers only on death and there is no maturity value at the end
of the term.
o Premium Chargeable: Group (Term) Insurance Scheme is at present offered
under One Year Renewable Group term assurance plan (OYRGTA). Every
year on Annual Renewal date LIC charges the premium
depending upon the changes in size and age distribution of the age group.
o Different Schemes: Group (term) Insurance Scheme has a number of varieties.
The Scheme may provide for a uniform cover to all members of the group or
graded covers for different categories of members, cover for all amounts of
outstanding housing loans or vehicle advances, or some other benefits (e.g.,
life cover to supplement pension or PF benefits in case of death). The schemes
may have add-ons like Double Accident Benefit, Critical Illness Benefit,
Disability benefit etc.

General Features of various Group Insurance Schemes:

1. PREMIUM: The premium under such scheme may be wholly paid by the employer or the
Nodal Agency. However, the scheme may be contributory i.e. the members may also
contribute.

2. DOUBLE ACCIDENT BENEFIT: Double Accident Benefit, i.e. payment of double the
sum assured on death due to accident (without permanent disability benefit), may be allowed
under Group Insurance Schemes for an extra premium.

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3. ELIGIBILITY: For Group Insurance Scheme in lieu of EDLIS the insurability condition is
that should be a member of the Provident Fund Scheme of the employer. For other GI
Schemes of employer-employee groups the insurability condition is that the member should
not be absent on ground of sickness on the entry date. For all non-employer-employee Group
Schemes the basic insurability condition is that the member should be in good health on the
date of entry.

4. ADMINISTRATION OF THE SCHEME: At the commencement and thereafter on each

Annual Renewal Date, the Group Policyholder will have to send all the member's data (and
particulars of the new entrants from time to time) to the P & GS unit of LIC. Detailed
OYRGTA premium calculation will be made on each Annual Renewal Date.

SOCIAL SECURITY SCHEMES:

1) JanaShree Bima Yojana (JBY):

The objective of the scheme is to provide life insurance protection to the rural and urban poor
persons below poverty line and marginally above the poverty line.

ELIGIBILITY:

A person who is

• Aged between 18 and 59 years.

• Below or marginally above poverty line

• A member of any of the approved vocation/occupation groups

NODAL AGENCY:

A State Government Department which is concerned with the welfare of any such
vocation/occupation group, a Welfare Fund/ Society, Village Panchayat,NGO,Self-Help
Group,etc.

MINIMUM MEMBERSHIP SIZE:

Twenty five.

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2) Shiksha Sahayog Yojana :

This is a scholarship scheme launched on 31.12.2001 for the benefit of children of members
of Janashree Bima Yojana.

ELIGIBILITY:

Students studying in ix to xii standards, whose parents are covered under Janashree Bima
Yojana. If a student fails and is detained in the same standard, he will not be eligible for
scholarship for the next year in the same standard.

BENEFIT:

Scholarship of Rs 300/- per quarter per child will be paid for maximum period of 4 years. The
benefit is restricted to two children per member (family) only.

PREMIUM:

No premium is charged for the scholarship.

HOW TO CLAIM SCHOLARSHIP:

The Nodal Agency will identify the students. The member of Janashree Bima Yojana whose
child is eligible for scholarship has to fill up an application form (available with Nodal
Agency) and submit to the Nodal Agency. The applications duly filled up and certified will
be sent along with the list of the beneficiary students by the Nodal Agency to the concerned
LIC, P&GS Unit for disbursement of scholarship/s. The scholarship/s will be disbursed to the
beneficiary students through the concerned Nodal Agency.
As only a limited number of beneficiaries will be provided scholarship under the scheme, the
selection for eligible students will be made on the basis of poorest of the poor.

The scheme will be administered through Pension and Group Schemes Department of LIC of
India.

3) Aam Admi Bima Yojana :

In a rural landless household, when everyday living is a struggle, it is difficult to face life
with a smile. And it becomes even more difficult when the future of your family is uncertain.

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AAM ADMI BIMA YOJANA, a prestigious scheme of the Central and State / Union
Territory Governments and administered by LIC brings a ray of hope and smile to these
households.

NODAL AGENCY :

The Nodal Agency shall mean the State / Union Territory Government appointed to
administer the scheme.

The Nodal Agency shall act for and on behalf of the insured members in all matters relating
to the Scheme.

IDENTIFICATION OF BENEFICIARIES:

The State / Union Territory Government in consultation with the Panchayats will identify the
persons to be covered under the scheme. All the members will be provided with an identity
card by LIC with an unique identity number.

ELIGIBILITY:

The member should be aged between 18 and 59 years.

The member should be the head of the family or one earning member in the family of rural
landless household.

AGE PROOF:

• Ration Card

• Extract from Birth Certificate

• Extract from School Certificate.

• Voters list

• Identity Card

In case of doubt, a certificate from Primary Health Centre can

be accepted as authentic proof of age.

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 CONCLUSION

Key to a successful business is keeping the employees motivated. Happy and secured
employees work better, which in turn reduces the employer’s tension. Group Insurance is an
insurance which covers a group of people (like employees of a common employer or
professionals in a common group).

The concept of Group Insurance emerged and flourished in the western and developed
countries. While it took a late start in India, the major developments were observed only after
Independence. The present form of Group Insurance originated in the United Stated of
America in the early 19th century.

The concept of Group Insurance was introduced; lot of hostility came from different sections
of public. The scope of Group Insurance has been broadened with the passage of time. The
Group Insurance plays an important role in enabling the employers, the employee’s benefit
schemes at case. However, the more demanding role the Group Insurance Schemes have to
face is to provide protection and coverage to those who are self employed.

Industrialization has drastically changed the Socio-economic aspects of human life around
the world. Social and economic insecurity has become the main cause of concern for
individual, employees and governments. Social Security, Welfare legislations and employee
benefits to a great extent have attempted to address these issues. Employee benefit schemes
provide adequate financial security in two events namely premature death and excess
longevity. Group Insurance has become an indispensable part of the employee benefit
package which provides financial benefit at a very low cost.

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 BIBLIOGRAPHY:

1) GROUP INSURANCE

- THE ICFAI UNIVERSITY

WEBLIOGRAPHY:

1) www.ask.com

2) www.licindia.in

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