Individual and Group Insurance

One of the most important classifications of insurance distinguishes between individual and group insurance contracts. The characteristics of these two categories of insurance may be described by their differences.

Individual indemnity comprises contracts naming as insured individual person of business entities with the insurance generally for the direct benefit of the person insured. Group indemnity, a major component of the employee benefit plan, is a plan in which there is coverage of a number of persons for business firs under a single contract between an insurer and the group policy holder such as employer or trade association.

It is characterized by the group selection of insured's without evidence of insurability on a n individual basis, lower costs through the economies of volume distribution and administration and the increased certainty associated with large groups of insured's, premiums influenced by the experience of the group, and the continuing contract lasing beyond the lifetime of individuals for whom protection is provided.

In the field of life and health insurance, individual assurance is further classified into ordinary and industrial insurance. Industrial life and health indemnity, which is sold to low-income individuals through agent, is characterized by small policies and weekly or monthly premiums usually collected at the home of the policyholder. Generally, industrial insurance serves best those segments of the population requiring the collections and other series of the agent. The largest U.S. companies have withdrawn from the industrial field as the need for this industry has declined: a considerable volume of industrial life insurance is written, however, particularly in the Southeast and Southwest. It represents only 4 4% of the total insurance in force in the United States. However, industrial insurance is a major force in the life and health assurance business of developing countries.

Group life and health insurance has grown at a substantial rate and represents 34.9% of the insurance force in the United States. Ordinary insurance is still the most significant branch of life and health insurance, constituting 54.7% of the total life and health insurance in force.