Group Insurance

Group Insurance

group insurance, insurance provided to members of a formal group such as employees of a firm or members of an association. Group insurance is distinguished from individual insurance in which single policies are sold to one person at a time and from social insurance (e.g., unemployment insurance, social security), which is sponsored by the government.

The concept of group insurance probably originated in ancient Rome with the Roman burial societies, but the first modern group policy, covering the employees of the American retail merchandising company Montgomery Ward & Co., went into effect in 1912. Group insurance is offered in every country in which private insurance companies operate and is growing in importance every year.

There are several different types of group insurance. Group life insurance is perhaps the most common form. It is usually offered as group term insurance, which is in force only for a specified period of time and which does not build up any cash value. Sometimes group permanent life insurance is offered. This type builds up a cash value and stays in force until the policy reaches maturity and is cashed or until the death of the insured. Group health insurance includes group medical expense insurance, which pays part or all of the insured’s hospital, surgical, and other medical bills, and group disability income insurance, which replaces part or all of the income lost due to illness or accident. Group accidental death and dismemberment and group travel accident insurance combine elements of both life and health insurance.