Life Insurance: What Is a Master Policy/Contract?

Do you know anything about a master policy when it comes to life insurance? If you purchase your own coverage the answer is probably "No."

The definition of a master policy is as follows: an insurance policy that is purchased by and issued to a trustee or employer, which in turn establishes a group plan under which employees can be covered.

What It Includes

A master policy or contract is issued by an underwriter to a company. Subsequently, the insurance products that are covered are then made available to employees. The master policy includes details on the conditions, coverage included, and any eligibility criteria that must be met by those who wish to join the plan. 

Most people never have to worry about a master policy because they purchase life insurance on their own. Even if they do so through an employer, this hardly ever comes up.

A master policy is something that employers and trustees need to become familiar with. With this, they are given the ability to offer coverage to members of their organization.  

Just as the name suggests, with a master policy there is a “master” or “overseeing entity” that is in charge of administering the policy.  

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