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Group life insurance is different to individual life insurance

Group life insurance is different to individual life insurance

Group life insurance may not be a new concept, but there are not many insurers in South Africa who offer products that really work for small businesses. Here at Simply we thought that needed to change, so we created a group insurance product that we felt the market needed. If you’re a small business owner yourself, you may be wondering what the differences are between group life insurance and individual life cover. Here are the main differences:

A group life insurance policy is taken out by the employer

Our product is a life insurance combo that includes life, disability and/or funeral benefits – and it’s been specially designed for small to medium sized businesses (SMEs) in South Africa. Compared to traditional life insurance where the individual signs up as the owner of the policy, group insurance goes under the company’s name. This means that you as the employer are the one responsible for physically paying the premiums each month, rather than the individual that’s being insured.

It’s generally cheaper

Group life cover is typically much cheaper than the cover your staff might take out privately for themselves. There are a variety of reasons for this, most importantly that you’re buying the policy “wholesale”, so the costs of selling and maintaining the policy are spread across everyone. Because of this cheaper price, you can pass these savings on to your employees, yet still rest easy knowing that they’re protected against unknown risks in the future.

Existing health issues

When you sign up for individual life cover, you typically have to complete lengthy questionnaires about yourself, and list all your existing health issues. But with group life insurance, you’ll normally be covered automatically, with no medical questions asked. With group life insurance, as long as you have at least five employees, everyone is guaranteed cover  regardless of their state of health.

No waiting periods

Waiting periods are often waived or shortened with group cover. So, while most simple individual life insurance products in the market have a 6-month waiting period before they will pay out claims resulting from illness, group cover does away with this. Simply’s group insurance cover has no waiting period on life and funeral cover – employees will have full cover from day one.

It’s more consistent

Since you the employer are paying the premium, rather than the individual employee, the consistency of payments with group insurance cover is typically better. This means that your employees and their dependants are more consistently protected, as payments are less likely to be missed, leading to lapsed cover.

It’s linked to your employment

Although it may be stating the obvious, remember that group life insurance cover is linked to an employee’s job. So, if that employee leaves your company, their insurance under your group cover policy will stop too. This is unlike an individual life insurance policy, which continues to provide cover no matter where they are employed.

Employees who leave may have the option to take out an individual policy regardless of their state of health at the time. Also, with group insurance, the level of cover is normally chosen by the employer, so individuals can’t change their cover as they see fit.

Voluntary group insurance

Another kind of group insurance is voluntary group insurance  which means that anyone in an employee environment can buy the product, and you don’t have to sign up the whole workforce. Simply has recently launched this product, which means that as long as five people in your organisation want to take out group life insurance, they can. Voluntary Group cover offers similar benefits to the compulsory product, although the waiving all medical questions and waiting periods will only happen for larger groups, or where a high proportion of eligible employees choose to participate.

Businesses will often assume that their employees have taken necessary steps to insure themselves, but in reality many people don’t. This creates immense stress for everyone when your staff members experience disability or death, because you as the employer feel obligated to help out financially, which can put huge pressure on your growing business. As a small business owner, opting for group cover means you avoid this financial strain, and at the same time have better workplace benefits to offer, which helps in attracting high quality employees.


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The underwriter of this policy is Old Mutual Alternative Risk Transfer Limited (OMART) a registered long-term insurer.

Copyright 2020 Simply Financial Services (Pty) Ltd. All rights reserved. Simply is a registered financial services provider (FSP: 47146).