Of late years interest has been shown in group insurance plans. This was first brought to public notice through the government group insurance plan for the war veterans. Insurance science became highly developed in the course of working out Uncle Sam’s war veteran problems, and now employes of companies are given opportunities for insurance benefits on a new and unusual basis, which, because of the large number of risks at one time, affords various advantages such as, for instance, the elimination of medical examination.
Other than this, the payment for this insurance is by arrangement with the employer, who not only aids in paying for it through his own funds, but deducts systematically the cost of the insurance from the worker’s wages. The reduction in costs, both of sale and collection, afforded to the insurance company, permits it to offer greater benefit to the insured.
Some insurance companies call their plan a “Salary Savings Insurance” and the plan is obviously as much a savings plan as it is an insurance plan, since, like all insurance, this group insurance has a cash value. Various forms of this type of insurance are available. The employer, under some forms, designates the number of months over which payment is to be made, and the plan also provides for choice between payment in one sum; payment partly in one sum, and balance in installments or payment weekly over a period of a year or fifteen months. The following table, that of the Prudential Insurance Company, gives some idea of the payments and the intervals of payment for each thousand dollars of group insurance and thus furnishes the basis of examining the workings of this insurance plan in detail:
Amount of Amount of Number of Each Monthly Number of Each Monthly Months During Installment Months During Installment Which Monthly Per $1000 Which Monthly Per $1000 Installments of Amount Installments of Amount Would be Paid so Payable Would be Paid so Payable 6 $167.03 34 30.49 7 143.31 35 29.67 8 125.52 36 28.90 9 111.67 37 28.17 10 100.60 38 27.47 11 91.53 39 26.81 12 83.99 40 26.18 13 77.60 41 25.58 14 72.12 42 25.00 15 67.38 43 24.45 16 63.23 44 23.92 17 59.59 45 23.42 18 56.36 46 22.94 19 53.47 47 22.47 20 50.87 48 22.03 21 48.52 49 21.65 22 46.38 50 21.23 23 44.43 51 20.83 24 42.55 52 20.49 25 40.98 53 20.12 26 39.37 54 19.76 27 38.02 55 19.46 28 36.76 56 19.12 29 35.46 57 18.80 30 34.36 58 18.48 31 33.33 59 18.21 32 32.36 60 17.95 33 31.45
Many employers add of their own accord $500 to $1000 worth of insurance and thus make a contribution to the total.
The Salary Savings Insurance idea is being widely offered by insurance companies; and in fact some insurance companies have adopted it for their own employes. For instance the United States Federal and Guarantee Company has taken out a policy for its employes who have been in the company’s service continuously for two years and receive an annual salary of $780 or more. The cost to each eligible employe is 5 cents per month per $100 of insurance. The remainder of the premium is paid by the company and the amounts obtainable by employes range from $500 to $5000. No medical examination is required.
Many of these policies also carry with them certain specific clauses which, in the event of illness on the part of an employe makes it possible for the premiums to be waived by the company and a certain percentage of the face of the policy paid to the employe during the term of illness.
Also in the event of partial or total disability, a great many of the newer group insurance policies carry benefits of one kind or another, and pay to the employe, if totally disabled, a certain income for the balance of his or her life. Or, if temporarily disabled, a percentage of the policy is paid to the employe during the period of disability.
There are, too, certain policies, in group insurance, which carry specific provisions for the benefit of a workman’s family in the event of his death by accident. That is, a double indemnity is paid to the dependents of the employe when his death occurs by accident.
All these methods of group insurance available to employes, serve several important purposes in savings. Not only is the savings idea kept consistently going, on a systematic and proportionate scale, but, in addition, many other benefits are available, not possible in merely saving in a savings bank. For instance, when the employe begins to save by the method of insurance, he immediately creates an estate of the face amount of the policy. He also, by making his first payment himself or through his employer, provides immediately for his dependents in the event his salary or wages should be discontinued through his own disability to earn a salary.