Definition - What does Master Contract mean?
A master contract is an insurance policy purchased by a trustee to cover individuals under a group plan. It is often obtained by employers who wish to provide insurance coverage for their employees.
As a general rule, the master contract is typically only given to the employer. Those who are insured under the policy will receive, instead, certificates of their coverage.
It is also known as a master service agreement (MSA).
Insuranceopedia explains Master Contract
A master contract is issued by an insurance underwriter and given to the company that purchases the coverage. The insurance products covered by the master contract are then made available to the employees who opt into the group plan.
Master contracts include key details about the coverage, such as conditions and exclusions. Trustees and employers need to become familiar with the policy and its details so they can design coverage that will benefit all members of the organization.
Not everyone can acquire coverage under the master policy. Most insurance companies and even employers themselves set up establish eligibility criteria for the plan.
The master contract model is a convenient option for those who wish to purchase group insurance because there is an overseeing entity (usually the insurance company) that takes charge of administering the policy.