Printable View
A free cover limit arises under group policies. Free Cover Limit is the amount of cover up to which insurance cover can be allowed based on simple insurability conditions without requiring medical evidence. Each Scheme is available with a free cover limit depending on the size of the group.
Free Cover Limit (No evidence Limit/ Automatic Acceptance Limit) -
Free cover limit is a limit on insurance cover to an individual member. Up to this limit, no evidence of health is required. This limit is determined by the insurer based on the characteristics of the group.
Just to add -
Free Cover limit, also referred to as Non-Medical Limit, is set by the Insurance Company providing the Cover. It refers to the threshold, which, if not exceeded by a member’s Death Benefit, the member is accepted into the Scheme without medical examination.
Scheme consisting of 20 members
18 members each with sum Insured = 50000
2 members with sum insured = 200000
Average Sum Insured = 65000
Calculated FCL = 2X 65000 =130000
Underwrite the top two lives for 70000 each
Scheme consisting of 300 members
297 members each with sum Insured = 50000
3 members with sum insured = 300000
Average Sum Insured = 52500
Calculated FCL = 2X 52500 = 315000
Prudent to Underwrite top three lives by setting FCL at lower level