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Life Insurance and Health Insurance nowadays are offered to the employees by their respective companies. These are generally, Group Insurance Policies with various key advantages. It is generally cheap, easy to acquire, and covers a large group under one policy.
One of the prominent benefits of these policies is the Free cover limit (FCL). Here are a few things that every individual must know about Group Term Life Insurances and Free Cover Limit!
What Is Group Term Life Insurance?
A policy on a group platform is issued for one year. Incorporates, the policy is issued in the name of the employer and the employer looks after the administration of the policy and deals with the insurer for addition and deletion of employees from the group policy and claims management as well.
The employer also holds the right to renew the policy!
The employer pays premiums for all employees and offers either flat or graded cover to them. For example, all employees may get a flat sum assured of Rs 5 lakh each or they may get be allocated sum assured of Rs 5 lakh, 7 lakh, 10 lakh, and so on based on their grades or designation bands.
What Is Free Cover Limit?
On the group term life insurance platform, the idea is to cover a large group of individuals at minimum cost. That calls for simplified underwriting and here’s where FCL comes into the picture.
FCL is a level of sum assured that is offered to a firm's employees without insisting on medical tests or seeking evidence of good health. It is computed after taking into account various factors relating to the group members: average age, number of members, historical growth rate, and past mortality experience, if available.
How Does FCL Work?
FCL does not mean you get life insurance cover for free. It simply means if the member of the group has a sum assured that is lower than the FCL, then he is offered insurance without any underwriting requirement provided he is actively at work. For the employees who are not actively at work and are below the FCL, life insurance is offered only after they resume work.
Individuals who are above the FCL have to undergo some underwriting requirements. It could be a good health declaration, questionnaire, or even medical tests. The insurer may also specify some age limit, above which the medical may be compulsory.
Let’s say an employee whose eligible sum assured is above FCL and is asked to go for medical tests. But he refuses to do so. In that case, his life cover is capped at the FCL. In the case of group term life insurance covers, FCL sum assured is granted to all employees without seeking any person-specific information from them.
You can contact your insurer or can visit Ashutosh Securities Pvt. Ltd. for any further assistance in mutual fund investment. Keep reading our article and stay updated with the latest news about Health Insurance and Life Insurance!
For any kind of query, you can contact us at Shri Ashutosh Securities Pvt Ltd., we are here to help you in any way possible.
Happy Investing!
(Mutual Fund investments are subject to market risk Illustrations are for example only, there is no guarantee of returns. Past performance is not an indicator/guarantee to future returns).