Category: Group risk fundamentals · Reviewed by Mark Fox, Broker · Renewals · Last reviewed 2026-06-10
The free cover limit (FCL) — sometimes called the automatic acceptance limit — is the per-member cover level that an insurer will grant under a group risk scheme without requiring any individual medical evidence. The FCL is set by the insurer at scheme inception based on scheme size, demographics and benefit design, and is reviewed annually. Members are insured for their full benefit up to the FCL automatically; cover above the FCL is granted subject to individual underwriting.
Category: Group risk fundamentals Also known as: FCL, automatic acceptance limit Typical FCL drivers: scheme size, average age, occupation, benefit design Related concepts: Group risk underwriting limits, Group risk pricing factors, Continuation option group risk
The FCL is the single most important underwriting concept in group risk because it determines what proportion of the workforce is automatically covered. For most small and medium schemes, the FCL is set so that 80–95% of members are within it, with only the very highest earners exceeding it.
There is no statutory basis; the FCL is a commercial underwriting tool. However, the insurer’s medical evidence process must comply with the Data Protection Act 2018, the UK GDPR (special category health data), and the Access to Medical Reports Act 1988. The FCA Handbook (ICOBS 6) requires that scheme members be told about underwriting limits in scheme literature.
The FCL is normally expressed as a single £ amount for group life and group CI, and as a single £ amount of annual benefit for group IP (since group IP benefits are income, not capital). Typical illustrative ranges (subject to insurer pricing and scheme demographics) might be: - Group life, 50-life scheme: FCL £350,000–£500,000 - Group life, 500-life scheme: FCL £1m–£1.5m - Group IP, 200-life scheme: FCL £80,000–£100,000 of annual benefit
A 75-employee scheme has an FCL of £400,000. A new joiner with a salary of £75,000 and 4× salary cover (£300,000) is fully automatically insured. A board member with a £150,000 salary and 4× salary cover (£600,000) is automatically insured up to £400,000; the additional £200,000 layer is subject to a short health declaration. The board member declares no health issues and the layer is accepted at standard rates.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-10. Next review: 2026-12-10.
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