Top 10 Myths About Group Insurance

Group insurance is one of the most effective ways to provide financial security and peace of mind for employees. Yet, despite its popularity, there are plenty of misconceptions that prevent businesses and staff from truly understanding its value.

In this article, we’ll bust the top 10 myths about group insurance, so you can make informed decisions for your business and employees.

Myth 1: Group Insurance Is Only for Large Corporates

Many people believe that only big businesses can access group insurance. The truth? Group insurance can be tailored for small and medium-sized enterprises (SMEs) too. Even businesses with just a handful of employees can benefit from pooled risk and competitive premiums.

Myth 2: Group Insurance Is Too Expensive

Some employers avoid group insurance, thinking it’s unaffordable. In reality, group cover is often cheaper per employee than individual policies because the risk is spread across the group.

Myth 3: It’s Just Basic Life Insurance

While life insurance is the cornerstone of group cover, most policies also include TPD, income protection, and even trauma cover. Businesses can customise the mix of benefits based on employee needs.

Myth 4: Employees Don’t Value Group Insurance

Research consistently shows that employees highly value financial protection. For many, it’s a deciding factor in choosing or staying with an employer. Group insurance boosts retention and positions the business as an employer of choice.

Myth 5: All Group Insurance Policies Are the Same

No two policies are identical. Premium structures, benefit levels, exclusions, and flexibility all vary between insurers. That’s why it’s critical to review and compare options with expert guidance.

Myth 6: Group Insurance Covers Everyone Equally

Policies can be designed with different benefit levels depending on role, salary, or service length. This flexibility helps employers provide fair and competitive benefits.

Myth 7: It’s Hard to Administer

Modern group insurance policies are designed with easy administration in mind. Adding or removing employees is straightforward, and many insurers provide online portals to streamline the process.

Myth 8: Once You Set Up a Policy, You Don’t Need to Review It

Workforces evolve, costs change, and employees’ needs shift. A group insurance policy should be reviewed at least annually to ensure it remains competitive and relevant.

Myth 9: Group Insurance Eliminates the Need for Personal Cover

While group insurance provides a solid safety net, it often won’t meet all of an employee’s financial needs. Many employees choose to top up with personal cover for greater peace of mind.

Myth 10: Group Insurance Is Only About Death Benefits

Group insurance isn’t just about life cover. Income protection, TPD, and trauma cover provide support for employees who can’t work due to illness or injury — often when it’s needed most.

Final Thoughts

Group insurance is far more flexible, affordable, and valuable than many people realise. By separating fact from fiction, businesses can make better decisions about employee benefits and ensure their staff are genuinely protected.

If you’re unsure whether your current policy is meeting its full potential, an independent review can help uncover cost savings and better cover options.

Frequently Asked Questions About Group Insurance

1. Is group insurance really cheaper than individual cover?

Yes. Because risk is pooled across a group, insurers can offer lower premiums compared to standalone individual policies.

2. Can small businesses offer group insurance?

Absolutely. Many insurers have products specifically designed for SMEs, sometimes starting with as few as 5–10 employees.

3. What happens if an employee leaves the company?

Some group policies allow employees to continue cover on an individual basis (known as portability). It’s worth checking if this feature is included.

4. Does group insurance replace personal insurance?

Not entirely. Group insurance provides core protection, but employees may need additional personal cover to fully meet their financial needs.

5. How often should a group insurance policy be reviewed?

At least once a year, or sooner if your workforce or business structure changes significantly.

Employer Group Insurances