Legal Definitions - group policy

A group policy is a single insurance contract that provides coverage for multiple individuals who are part of a specific group. Instead of each person purchasing their own individual policy, an organization (such as an employer, association, or union) holds the master policy, and the individuals covered receive certificates of coverage or similar documentation. This type of policy is often more cost-effective and offers standardized benefits to the group members.

• Example 1: Employer-Sponsored Health Insurance

  A large manufacturing company offers health insurance benefits to all its full-time employees. The company contracts with an insurance provider to create one comprehensive health insurance plan that covers hundreds of employees and their eligible dependents.

  This is a group policy because the company, as the policyholder, secures a single insurance contract that extends health coverage to all its eligible employees. Each employee doesn't buy an individual health plan; instead, they are covered under the company's master policy, receiving benefits as members of that specific group.

• Example 2: Professional Association Life Insurance

  The National Association of Engineers provides an optional group life insurance plan to its members. Any engineer who is a dues-paying member of the association can opt into this plan, which offers a set amount of life insurance coverage at a discounted rate compared to what they might pay for an individual policy.

  This illustrates a group policy because the association holds the primary contract with the insurer, allowing its members to access life insurance coverage collectively. The policy is designed for the group of engineers, providing a uniform benefit structure for those who choose to participate.

• Example 3: University Student Travel Insurance

  A university requires all students participating in its study abroad program to have travel insurance. Rather than having each student find and purchase an individual policy, the university arranges a single travel insurance policy that covers all enrolled study abroad students for medical emergencies, trip cancellations, and lost luggage during their time overseas.

  This is a group policy because the university acts as the policyholder, obtaining one insurance contract to cover a specific group – its study abroad students. The students benefit from the coverage without needing to secure separate individual policies, streamlining the process and often providing better terms due to the group purchasing power.