Free Cover Limit (FCL) refers to the level of sum assured (SA) which an insurance company offers to employees of a firm under a group insurance plan, without medical tests, underwriting or examination. Also known as no evidence limit, it is one of the vital elements in a group insurance policy.
As we know, group insurance policy is the insurance coverage that is provided to a group of people.
Here are the key things to know about free cover limit in a group insurance plan:
How is free cover limit calculated?
FCL is calculated on the basis of several factors such as the number of members in the group, average age of the group members and average level of benefits among the employees. And therefore, it might vary from employer to employer, said Abhishek Misra, CEO and Principal officer at Bonanza Insurance Broker Pvt Ltd while talking to CNBC-TV18.
Generally, small groups of employees under a group insurance scheme enjoy lower FCL levels.
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How it benefits employees
The participating employees enrolled under this plan get the benefits of time and cost saving, said Rakesh Goyal, Director at Probus Insurance.
It enables employees who fall under the FCL to avail insurance without any underwriting requirements if they are active at work. For the employees who are not active at work and are below the FCL, insurance is offered only after they resume work.
And, what about employees who are above the FCL?
Employees who are above the FCL are required to provide evidence of insurability in the form of good health declaration or medical tests.
They have to undergo some of the underwriting requirements such as health declaration, medical test, etc, or the insurer might have certain age limit criteria for the medicals to be mandatory, said Goyal.
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(Edited by : Thomas Abraham)
First Published: IST