Association Group Insurance

Published: | Updated: December 17, 2017

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Definition - What does Association Group Insurance mean?

Association group insurance is insurance an organization or formal group purchases on behalf of its members so that it can benefit from lower premiums per member. The discounted price makes it a desirable membership benefit for various types of associations.

Insuranceopedia explains Association Group Insurance

If an insurance company can sell bulk amounts of policies at once, instead of selling each policy individually, it can save time and money. These savings on the insurer's side translates into the discounts offered on group insurance plans.

However, to purchase association group insurance, the group must be a recognized and official organization, such as the AARP. People cannot form an association with the sole purpose of purchasing insurance. In contrast, these policies are meant to be a form of membership benefits. Without this exclusion, insurance companies would be susceptible to adverse selection.

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