Can I get group coverage for my small business?

The concept of group insurance is founded on five principles. Group coverage would not be a viable product for the insurer to offer were it not for these. The uncertainty as to the risks involved would make it unacceptable to the insurer, or it would be excessively expensive for the employer to provide. The five principles of group insurance are:

  • Each employee in the group must be actively at work on a full-time basis
  • The employee cannot determine the amount of their own coverage
  • Employee contributions must be made through payroll deduction
  • There must be an employer contribution
  • There must be a spreading of risk over the group

Any deviation from one or more of these five principles should be offset by some compensating factor. For example, if the group membership is small (say, less than 25 people), the spreading of risk principle is not met. That does not mean that smaller companies can=t get group insurance, but there may be conditions. For example, evidence of good health may be necessitated for each employee wishing to join the group.

We suggest that you discuss the possibilities for your company with an insurance broker who iknowledgeable about group plans.