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Group Insurance Schemes: Advantages and Disadvantages


In the present modern times, the employees have to be taken care of thoroughly. The companies are nowadays taking various initiatives to ensure that the employees enjoy their work at their workplace. Among various schemes, the latest in the bandwagon is the group insurance schemes. The group insurance schemes are a part of the insurance provided to the employees.

Group Insurance Schemes

Advantages and Disadvantages of Group Insurance Schemes: Advantages Disadvantages
1 Additional protection Uncertainty
2 Death benefit Cheap schemes with less benefits
3 Easy availability Tricky and difficult to understand
4 Insurance is important for employees Avoiding rider and additional insurance
5 Honesty by employees Do not rely on one person
6 Inclusion in insurance for group bonus Efficiency of the workers
7 Lower cost due to a larger risk pool Incentives are better
8 Small business health insurance can save money Continuation issues
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Advantages or Benefits of Group Insurance Schemes:

The group insurance schemes are meant to the employees who have been performing excellently well in the company. As the company is growing, it is important that the employees get their due.

In order to do this, the companies take life insurance schemes for the employees and workers wherein they include the group insurance schemes. It is very different from other types of insurance which deal in commodities and other materials. In case of such insurance there are specific replacement and repair values.

1. Additional protection:

The group insurance scheme provides the insurer an additional protection. This is in addition to the insurance policies you may have already for yourself and your spouse.

Initially, the discussion about life insurance may seem to be a boring topic but it has a lot of importance in our life. It is necessary that you take the decision for the group insurance plans or schemes at an early stage in your life.

2. Death benefit:

Once you have decided to take the group insurance scheme then next important thought is to determine how much death benefit you would require. Those who go for higher death benefit will have to pay higher premiums.

In order that you get the correct coverage and that too at a reasonable premium, you need to assess your death benefit requirements as per the present situation. When you apply for the group insurance schemes, make sure that you get the best life insurance policy.

3. Easy availability:

It is possible to get the group insurance scheme online since most of the insurance companies have the facility of providing the insurance coverage online.

The applicant just needs to fill the details about themselves and the company takes the data and sends their representative to the insurer in order to provide further details.

In the case of online insurance coverage, the renewal can also be done online. There is no need to go physically and get the renewals done. It is always advisable to have the group insurance scheme since it provides additional protection to you and your family.

4. Insurance is important for employees:

The life insurance should be taken when a person is young and healthy. The life insurance premium is much lower and cheaper when a person is young. This is because those who are young are supposed to be healthier and fit.

The amount paid for your coverage will be very less as compared to the older people. Another most important thing in life insurance is the amount of cover which you have to choose – you can choose which type of cover you would want.

You need to make sure that the cover you take should be able to take care of your main debts, mortgages, loans and credit card debts.

5. Honesty by employees:

In the case of group insurance schemes, the employees should be very honest. The person should perform at their best and only on the basis of this performance, the bonus will be awarded.

One should not show off but perform as per the requirement and rules of the company. These things should be mentioned clearly because when the bonus is to be given these things are revealed and there are chances that you may miss your bonus in case a small error occurs and you shall be blacklisted forever. So make sure that you provide all details to your agent.

6. Inclusion in insurance for group insurance:

Once you have decided to take the life insurance coverage then next important thought is to determine how much death benefit you would require.

Those who go for higher death benefit will have to pay higher premiums. In order that you get the correct coverage and that too at a reasonable premium, you need to assess your death benefit requirements as per the present situation. When you apply for the group insurance cover, make sure that you get the best term life insurance.

7. Major Advantage of group insurance policy:

The best group insurance scheme in life insurance essentially means those insurance companies who provide you with the best option of death benefit and that too at a reasonable premium which further going down may not prove to be a burden on you or your family. When you decide to get the group cover make sure that you do a life insurance comparison in order to get the best deal.

Every coin has two sides and in the same way getting group insurance schemes as also has its own disadvantages.

Disadvantages of Group Insurance Schemes:

1. Uncertainty:

Insurance has become the most important aspect in a person’s life in the present modern times. There is so much of uncertainty that one would always prefer to protect themselves and their family from any kind of natural or man-made calamity. In the olden days there was very little choice of life insurance; even the coverage offered was also very limited.

But with the passage of time and people becoming more and more aware about life insurance, there are many companies which have come up with different schemes and the best part they have been covering almost everything a normal person would expect to be covered.

2. Cheap schemes with less benefits:

Now when you are buying group insurance schemes the first thing which flashes your mind is to get the best bonus schemes. You can get the cheapest of them at a cheaper premium but make sure that the majority of the insurance benefits are included so as to boost the morale of the workers.

It is a known and well-understood fact that there are many external environmental things which are affecting the insurance but you can still try and control the internal changes and all this has to be considered while preparing the group insurance schemes.

3. Tricky and difficult to understand:

Life insurance always seems to be very tricky and hard to understand – make sure you get multiple quotes. If you get more options your purchasing will become easier.

Nowadays you can get online quotes and you need not spend time going from one agent to another. When you have to get the online quotes you need to mention your requirements – the coverage you want and also your age, details of family members etc. Depending upon the details, the companies will provide you the quotes.

4. Avoiding rider and additional insurance:

In case your sole goal is to get the cheapest life insurance then make sure that you do not take any life insurance policy riders or any kind of add on insurance. This shall increase your premium and in future if you are not able to pay the premium then it may land you in several problems.

You need to choose your bonus coverage very wisely – in case you have to choose for your kids then you can pay an additional premium and take the coverage. Make sure that you have very less number of riders to keep your premium low.

5. Do not rely on one person:

There are several life insurance companies that offer whole life insurance policies along with the group insurance schemes. Never choose one single local agent who provides insurance for just one company. It is advisable to take the services of a financial advisor who works for various insurance groups.

In such cases, they shall never give a biased review about insurance policies. The benefit of choosing such a financial advisor is that you can get the best coverage at the best premiums.

6. Efficiency of the workers:

When you are finalizing the group insurance schemes under the life insurance plans the major disadvantage is that the worker who is efficient gets the same benefit as the one, the inefficient worker gets.

This is because the bonus is divided proportionately among all the workers. This could create friction in the teamwork and hence it is preferable that you choose the schemes according to the skills of the workers.

7. Incentives are better:

The group bonus schemes are linked to the insurance and hence the workers need to take care that there are no claims or any kind of expenses – as compared to bonus schemes the incentive schemes are most preferred because the workers get an immediate boost and the amount given would be according to their performance and working.

Here the incentive amount would differ because it is based on individual performance.

8. Continuation issues:

There could be ups and downs in the business and it may not be possible for the companies to continue the bonus schemes for a long period of time. In case of any problems, there could be discontinuation and this could affect the group insurance schemes.

The employees themselves may not be interested to continue with them individually hence this could prove to be a heavy financial burden on the company in case they are not able to make profits in the long run.

Hence the company should ensure that the schemes are of short term and after a certain period of time the employee will be responsible for paying the premium if they wish to continue.


The group insurance schemes are a good boost for the workers who are spending their precious time to bring forward and increase the performance of your company. This is an additional attraction which most of the companies are providing to the employees at all levels.

This scheme is most practiced among the factory workers where they do not have any additional or lifelong income. The provision of such schemes will ensure that their family is also protected along with them and even after their retirement they can get certain amount on a monthly basis.