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.