Category: Group risk fundamentals · Reviewed by Taylor Watts, Broker · New Business · Last reviewed 2026-06-10
Group risk underwriting limits are the cover thresholds above which an insurer requires individual medical evidence from a member before extending cover. Below the free cover limit (FCL), cover is granted on a scheme basis without individual underwriting. Above the FCL, the member is invited to complete a short health questionnaire, undergo a medical examination or provide a GP report, and the insurer may grant full cover, apply a premium loading, impose an exclusion or decline cover.
Category: Group risk fundamentals Also known as: Medical evidence limits group risk Related concepts: Free cover limit group risk, Active member, Group risk pricing factors
Group risk schemes operate on the assumption that the workforce, as a pool of insured lives, has a broadly normal distribution of health risk. Above a defined threshold, the size of the at-risk cover for a single life is high enough that anti-selection risk becomes material to the insurer, so individual underwriting is applied. The FCL is set by the insurer for the scheme on inception and at each annual revision.
There is no statutory framework; underwriting limits are set commercially within the policy. However, the insurer’s underwriting practices must comply with the Equality Act 2010 (in relation to disability and other protected characteristics), the Data Protection Act 2018 and the UK GDPR (in relation to special category personal data including health information), and the Access to Medical Reports Act 1988 (where a GP report is requested).
A typical free cover limit for a 100-life group life scheme might be £500,000 — £750,000. Above the FCL, individual underwriting may add a loading of 50–200% to the at-risk premium for the excess layer, or impose conditions excluded for that member.
A 200-life scheme has an FCL of £750,000. An employee with a £200,000 salary receives 4× salary cover = £800,000. The first £750,000 is automatic; the additional £50,000 is offered subject to a short health declaration. The employee discloses well-controlled diabetes; the insurer accepts the £50,000 layer with a 50% loading.
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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