Group insurance is an important part of an employment package that provides financial protection to its employees.
In this article, we will share why the majority of employers in Australia are investing resources in improving their company’s group insurance.
Key Takeaways
- Group Insurance provides members with uniform insurance coverage with little to no underwriting.
- Aside from getting tax benefits on premium payments, it helps the business to attract and retain talent.
- Group Insurance is a crucial component in an employment benefits package.
How does a group insurance policy work?
A group insurance policy provides uniform coverage to a group of people, such as employees, members of a superannuation fund, or an organisation. It aims to offer simplified access to getting insurance coverage—with no underwriting and lower premiums.
Employees will receive insurance policy benefits in the event of death or disability—providing financial protection to your employees and their families.
Here’s how group insurance policies work in Australia.
Policy Purchase and Ownership
Typically, the employer or the trustee buys a master insurance policy to provide standard coverage to all the members. In group insurance policies, the employer or the super has control over the policy, adjusting the terms, coverage, and renewal.
Member Enrollment and Underwriting
For employees, some companies have automatic enrollment from the time they join the company. Unlike individual insurance policies, group insurance often does not require a medical underwriting to get approval for coverage.
Premium Payment
Some group insurance policies that are part of employment packages, the premiums are often paid by the employers.
Other payment arrangements also include a contribution from the employees or super fund members, which are automatically deducted from their salaries or funds.
Coverage Terms
In general, group insurance coverage is active as long as you are an eligible member of a group or while you are employed.
The coverage amount, coverage period, and other terms of the policy are set by the employers and will apply to all the members.
Portability and Conversion
When an employee or a group member leaves, the coverage ends, and the policy ceases. However, some policies allow the conversion from group insurance to individual insurance without new waiting periods or medical underwriting.
Claims Process
Depending on the type of insurance policy, employees can directly process a claim in case of an accident, severe illness, or death. Throughout the claims process, the employee may need the employer’s assistance in submitting a claim.
The benefits will be paid to the employee or their nominated beneficiaries as financial support.
Renewal and Policy Changes
Group insurance policies are annually renewable, giving employers the flexibility to adjust the coverage and terms of the policy.
What insurance policies are groups eligible for?
Groups of individuals, such as employees or members of organisations or superannuation funds, can be eligible for group cover. In Australia, aside from health insurance, group income protection and life insurance are the common types of group cover that are included in an employment package.
As an employer or a trustee, understanding the different types of group insurance policies is crucial for having effective coverage for your employees and members. These are the types of life insurance policies that you should consider:
Income protection insurance
Income protection insurance (also called salary continuance), pays up to 70% of the employee’s pre-disability income. Monthly benefits are paid when the employees become temporarily unable to work due to illness or injury. The benefits will cease upon the coverage period’s expiration or when the employee can work again, whichever occurs first.
Life insurance (death cover)
Life insurance pays a lump sum benefit to the employee’s beneficiaries in case of diagnosis of terminal illness or untimely passing.
Total & permanent disability (TPD) insurance
TPD insurance also pays a lump sum benefit to the employees in case of permanent disability due to severe illness or injury. To be eligible for a TPD claim, the employee’s condition must meet the policy’s TPD definition, whether it is defined as:
Own occupation – due to sickness or injury, the employee is unable to work in the same job function (usually for three consecutive months) and is unlikely to return to work ever again.
Any occupation – due to sickness or injury, the employee is unable to work in any job that is reasonably suited to the employee’s education, training, or experience (usually for three consecutive months) and is unlikely to return to work ever again.
Home duties – due to sickness or injury, the employee is unable to perform activities of daily living, such as eating, bathing, or dressing (usually for three consecutive months), and is unlikely to do home duties ever again.
Why take out a group insurance policy?
Employers in Australia take out a group life insurance policy because of its ability to financially secure the employees while providing cash flow benefits to the business. In addition, employers can use group insurance to satisfy the workers’ compensation insurance requirement.
Below are the advantages and disadvantages of group insurance.
Advantages of group insurance
- Attract and retain top talent: Providing a competitive employment package that includes life insurance and income protection makes your company stand out in the employer market.
- Boost productivity and company loyalty: Group insurance lets your employees feel valued and that the company cares for their families – increasing employee productivity and morale.
- Affordable cover: Due to economies of scale, group cover typically has discounted premiums, creating a more comprehensive and meaningful cover for employees.
- Customised group cover: Group insurance can be customised based on the risks your employees face. The standard cover can be composed of death cover, TPD, or income protection.
- Tax benefits: Premium payments are tax-deductible for businesses, provided that the business is not the policy beneficiary.
- Minimise financial impact on business: Extended employee leaves can have an impact on the business’s cash flow. Benefits from the group insurance provide financial protection in case of death, illness, or accident.
Disadvantages of group insurance
Flexibility and Coverage Limits: Group insurance is designed to have uniform policy terms and benefits for all members, which limits the customisation per member.
Risk of Insufficient Financial Protection: Typically, most group insurance cannot provide sufficient financial protection to the employees. Given the standard terms and benefits of the policy, it may not be enough to cover all of the employees’ individual financial stability.
Potential Cost of Premiums Issues: When the members of the group insurance have older individuals, smokers, or have existing medical conditions, the rate of premiums can increase.
Policy Portability and Control: If you are a member of a group insurance, leaving your employer, or your organisation, or changing your fund, can mean losing your coverage. Also, the control to renew your policy or change any terms rests with the policy owner.
Group vs individual insurance: which to choose?
When you are ready to get life insurance, a common misunderstanding is choosing between group and individual insurance. In most cases, group insurance is an automatic coverage either from your employer or your super fund.
Below is a guide to help you differentiate these two types of insurance.
| Feature | Group Life Insurance | Individual Life Insurance |
|---|---|---|
| Policy Ownership | Single policy owned by the employer, fund, or organisation | Individually owned and has full control |
| Eligibility | Typically offered as an automatic cover to employees or super fund members | Open to individuals who meet the insurance provider’s eligibility criteria |
| Medical Underwriting | Typically, no to minimal underwriting | Requires a medical history and a filled-out medical health questionnaire. Depending on coverage, you may also need to undergo a medical exam. |
| Customisation | Limited customisation. A uniform cover is set by the employer or the fund. | Flexible and can be tailored to an individual’s needs, budget, and health status. |
| Coverage Amount | Typically, has lower coverage limits to consider all the risks from members | Can be customised for efficient financial protection of the individual |
| Cost of Premium | Premiums are usually discounted due to bulk policies | Generally higher than group policies due to policy flexibility and customisation |
| Portability | May lose the coverage when the member resigns from work, leaves the organisation, or changes fund | Coverage continues regardless of employment status or change of funds |
| Renewal | Typically has automatic renewal if you are still an active member of the group | Depends on the insurance provider and the type of policy |
| Payment Terms | Employers pay the premiums as part of the employment package | Policy owner pays the premium |
| Claims Process | Benefits paid to the employee or nominated beneficiary/ies. Also can seek help from the employer or trustee to facilitate the claims | Benefits paid to the employee or nominated beneficiary/ies. Can process individually or with the help of insurance claim experts, such as Curo |
How to find the right group insurance policy with Curo Financial Services
As an employer or a trustee, it is your duty to find the right group insurance for your employees or members. However, navigating group insurance can be complicated to navigate on your own. At Curo Financial Services, we help businesses and organisations of all sizes get the right group cover.
We provide:
- Group risk assessment and analysis to determine the suitable cover
- Expert insurance advice that protects your members and that works within your budget
- Ongoing customer support for policy management and administration
- Expert group insurance claims advice
Our decades of experience in providing expert group insurance advice have helped employees and organisation members get financial protection.
If you are looking for a group insurance that suits your needs, contact us.
FAQs
Why is group insurance cheaper?
Due to bulk policies, the cost of premiums is discounted for group insurance. Having more members can get more leverage to negotiate the terms and coverage of the policy.
Who is the insured under a group policy?
Each of the eligible members of the group is insured. Either they or their nominated beneficiary/ies will receive the policy benefits when they die, suffer a critical illness, or get into an accident.
What is the minimum number of people for group insurance?
Depends on the insurance provider; however, some require a minimum of five (5) members to begin with. Working with an expert group insurance advisor will help you narrow down your options for insurers.
General Advice Disclaimer
General advice warning: The advice provided is general advice only and in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.
Factual Advice Disclaimer
The information I have provided you is purely factual in nature and does not take account your personal objectives, situation or needs. The information is objectively ascertainable and, therefore, does not constitute financial product advice. If you require financial product advice you should consult a properly licensed or authorised financial adviser.
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Last Updated on February 11, 2026 by Brent Satill
