Group Insurance Policy and Considerations for PEO

  1. What is Group Insurance for Employees?

A group insurance policy is a type of insurance which covers several people at once under one insurance contract. Such a policy is favourable because it covers every individual the same way despite their age, gender, job position, or socio-economic status. It also saves the person buying insurance the hassle to purchase coverage for each individual person.

It helps employees get insurance for themselves, their spouses, and their children. On the flip side, it is beneficial for employers who provide insurance as part of the employee benefits. Group insurance helps them significantly lower their costs because premium under a group insurance policy is much cheaper than an individual premium. It also eliminates the overheads of differentiating insurance coverage for employees falling under diverse salary brackets.

  • What is the employee eligibility for a group insurance policy?

The Insurance Regulatory and Development Authority of India (IRDAI) has set the following restriction. A company can only opt for a group insurance policy if there are at least 20 employees working for it. However, a business can choose group insurance even if there are fewer employees, if they extend it to their family members as well.

Another restriction imposed on employers is that they cannot form employee groups just to avail the group insurance option. There should be a logical grouping of employees (for example, a department, or a team within a department). If an insurer feels that the group is arbitrarily formed just for group insurance benefits, they can reject the policy.

Additionally, an insurer can change the employer eligibility for group insurance at their own discretion anyway. 

  • Group Insurance for employees under PEO

A group insurance policy can become a very potent tool for employee retention. Especially for employees under a PEO contract, who can get allocated to any project at any moment. It promotes employee loyalty by making employees feel a valuable part of the team.

But who provides the insurance employee benefit to employees under a PEO contract? Well, a professional employer organization initiates a joint-employment contract with business owners who cannot legally hire employees in a foreign nation. They become the legal employers of such employees, while the employees actually work for another organization.

Along with employment, a PEO agency in India also takes over the employee responsibilities of payroll processing, taxation, and employee benefits. But there are certain points to consider both for an employer and the employees.

  1. Safety net for the employer

A group insurance policy provides a certain measure of assurance for the PEO employer when an employee decides to quit the agency. If it was an individual insurance policy, it would’ve carried forward with the employee to their new employment.

But with a group insurance, the PEO service provider can add / delete group members dynamically, and the premium coverage adjusts accordingly. So, if an employee leaves, the employer can simply remove him / her from the group insurance.

  • Cost for group insurance policy vs individual insurance policy

As we’ve already discussed, a group insurance is significantly cheaper than an individual policy, considering all the employees to be covered.

  • Factors for PEO agencies to consider for choosing an insurer

A PEO agency should choose an insurance provider wisely, consider the following points:

  1. The insurance provider’s standing in the market.
  2. Whether the insurance provider offers cashless insurance coverage.
  3. Whether the insurance policy is convoluted and makes the insured jump through hoops to stay in compliance. (For instance, if it makes the insured stay in the hospital even after treatment, just so they’re in compliance of the policy.)
  4. What all does the insurance policy cover? Does it cover Covid-19 complications, pregnancy, sudden loss of pay? Unexpected unemployment? All of this will appeal to the employee and therefore, make them more loyal to your PEO organization.
  5. What is the pay-out sum of the insurance policy? The average insured expects the amount to be greater than 2 lakh INR. Premium PEO organizations in India like Remunance will offer a 5-lakh insurance sum. 
  6. Does the policy cover the spouse and kids with the parents? If the policy is extended to parents, does the premium skyrocket? (Typically, insurance agencies raise their prices in such cases owing to the old age of the parents.)
  7. Whether an employee is avoiding getting included under group insurance because of a variety of factors?
  8. Is the insurance a part of the CTC or over and above the salary? 
  9. Your search for a PEO agency in India ends here

It is these employee benefits that help retain employees under the PEO agency. Are you a business owner wanting to enter the joint-employment model? It will suit you to partner up with a professional employer organisation in India that values and cares for its employees.

Remunance is a seasoned PEO agency in India, with over 15 years of experience in the Indian markets. Under our PEO services, we offer to shoulder the payroll processing and employee benefits of the resources you hire for you business growth. For you, this means complete focus on employee productivity and performance and zero distractions of regulatory employee activities.