Definition
Free Cover Limit
The free cover limit is the maximum sum assured a group insurance scheme grants each member without individual medical underwriting.
In group term life and group health schemes, members are covered up to the free cover limit (FCL) purely on the basis of joining the group, sparing them medicals or detailed health declarations. The FCL is set by the insurer based on the group's size and profile.
Cover sought above the FCL, for higher voluntary top-up sums, usually requires individual underwriting and may attract loadings. The FCL is what makes group cover quick and inclusive, since healthy and less-healthy members alike get the baseline sum without scrutiny.
Related terms
- Corporate CoverCorporate cover refers to group insurance benefits an employer arranges for staff, spanning group health, group term life and group personal accident.
- UnderwritingUnderwriting is the process by which an insurer evaluates a risk, decides whether to accept it, and on what terms and premium.
- Group Term LifeGroup term life is a single life insurance policy providing term cover to a group of people, commonly employees, with the employer as master policyholder.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.