Group and Individual Insurance Plans 團體及個人保險計劃

Individual Insurance Plans 個人保險計劃

An individual plan is a separate contract between the insurer and the policyholder. The applicant chooses the type of plan, sum insured and term, such as term, whole life or endowment cover. The insurer decides on acceptance and premium using factors such as the life insured's age, sex, health, occupation and smoking habits.

The policy rights belong to the policyholder and do not depend on their job. The policy stays in force as long as premiums are paid under its terms. Where the plan has a cash value, the policyholder can generally also surrender or assign it.

Because each life is underwritten, documented and serviced separately, the administrative cost per policy is usually higher. In return, the cover can be tailored to the person's own needs.

How Group Insurance Works 團體保險的運作

Group insurance covers a whole group under one master policy. In the most common example, an employer insures its employees: the employer, not each employee, is the master policyholder. Members usually receive a certificate of insurance or similar document as evidence of their cover. Other groups can include trade unions, professional bodies, and lenders with their borrowers.

The group should generally exist for a purpose other than buying insurance, such as working for the same employer. The insurer sets eligibility conditions, commonly the employment category, a minimum number of members and being actively at work when cover starts.

Group life cover is usually arranged as renewable term insurance, commonly renewed yearly, and generally has no surrender value. Some schemes also provide additional benefits, or provide retirement benefits through group annuity and insurance contracts.

Hong Kong law does not generally require employers to buy group life insurance. Do not confuse it with compulsory employees' compensation insurance under the Employees' Compensation Ordinance (Cap. 282), or with the MPF system under the Mandatory Provident Fund Schemes Ordinance (Cap. 485). Occupational retirement schemes are regulated under the Occupational Retirement Schemes Ordinance (Cap. 426).

Group Underwriting, Premiums and Anti-selection 團體核保、保費與逆選擇

Group underwriting focuses on the risk of the group as a whole, such as its industry, size, age and sex profile, and past claims record. A member whose cover is within the free cover limit usually need not provide individual evidence of health. For cover above the limit, the insurer may ask for health information or a medical examination.

To guard against anti-selection, insurers usually require benefits to follow a uniform formula, such as a multiple of monthly salary or a job grade, rather than letting members choose. In a non-contributory scheme the employer pays the whole premium and normally covers all eligible members. In a contributory scheme members share the cost, and the insurer usually requires a minimum participation rate so that the scheme does not attract only those in poorer health.

The premium is normally based on the risk level of the whole group and reviewed at renewal, so a member's share may not match their own risk. Larger groups may be experience rated, with the group's own claims record reflected in the renewal premium or an experience refund.

One contract, simpler underwriting and the employer's help with records and premium collection generally make group cover cheaper per life insured.

Leaving the Group and Group Credit Life Insurance 離開團體與團體信貸人壽保險

A member's group cover generally ends when they leave the employer or stop being eligible. This is a key difference from individual insurance. If the master policy has a conversion option, the departing member can apply within a set period for an individual policy, usually without further evidence of insurability. The amount and type of plan are limited by the policy terms, and the premium is calculated on an individual policy basis.

In group credit life insurance the lender is the policyholder and the borrowers are the lives insured. Cover normally falls in line with the outstanding loan balance, so it generally works as decreasing term insurance. If a borrower dies, the payment is used to clear the balance still owing. It does not pay the original loan amount to the borrower's family.