Overview
The “Active at Work” clause in a Group Term Life (GTL) Insurance policy ensures that coverage is only valid if the insured employee is physically present and actively working at the time the policy takes effect. This clause is crucial for insurers to mitigate the risk of covering critically ill or inactive employees who are not currently performing work duties.
Under this clause, employees who are on medical leave, long-term absence, or hospitalized may not be eligible for immediate coverage until they resume active work. The intent is to prevent adverse selection and maintain fairness in group insurance pricing.
This clause is typically applied during:
- Policy inception
- Addition of new employees
- Renewal of coverage
Understanding the “Active at Work” clause helps HR teams and employers ensure compliance and proper employee onboarding under group life plans.
Though life insurers waive individual medical underwriting up to FCL limits. They necessitate that the GTL insurance cover, be underwritten subject to the “Active at work” clause.
An employee is actively at work under GTL Insurance if he/she is:
either actively performing his/her normal occupation or taking leave (other than sick leave) authorized by the employer;
working the normal number of hours required by the contract with the employer. Either at a normal place of employment or at a location as agreed with the employer or at a location to which he/she requires to travel for business;
mentally and physically capable of performing all the duties normally associated with the job;
and is not acting against medical advice in meeting any requirement of a) to c). For example, An employee assessed by their doctor as unfit to work will not qualify for active duty if they are working.
As individual medical underwriting is waived off in the Group Term Life policy, insurers introduce this clause in the policy to protect them against covering employees who are off-duty due to prevailing serious illnesses and limit coverage only to the employees who are fit and healthy and working normally.
About The Author
Varun
MBA Finance
Varun has established itself as a knowledgeable and reliable expert in the field with 8 years of experience. Specializing in group-term life insurance, they have dedicated their career to helping businesses and individuals navigate the complexities of insurance products and services. Currently writing for SecureNow, he produces insightful blogs and articles that demystify group-term life insurance, offering practical advice, industry updates, and strategic insights. Their deep understanding of the insurance landscape and talent for clear and engaging communication make their content invaluable for both seasoned professionals and newcomers alike.
FAQs
Q) What is the Active at Work clause in GTL insurance?
A) It’s a condition that requires an employee to be actively performing job duties on the policy’s effective date for their coverage to begin.
Q) Why is the Active at Work clause important in group term life insurance?
A) It prevents automatic coverage for employees who are ill, hospitalized, or absent, thereby reducing risk for the insurer.
Q) Who is considered ‘active at work’?
A) An employee working their normal duties for a minimum number of hours (e.g., 30 hours/week) and not on sick leave, unpaid leave, or hospitalization.
Q) What happens if an employee is not active at work when coverage starts?
A) Their insurance benefits may be deferred until they return to work, subject to the insurer’s terms and proof of health.
Q) Is the Active at Work clause standard in all GTL policies?
A) Yes, it is a common industry practice to include this clause in group term life insurance contracts.
Q) Can an employer override the Active at Work clause?
A) No, this clause is mandated by the insurer and cannot typically be waived unless negotiated in advance with underwriters.
