Can a group formed solely for the purpose of obtaining group insurance qualify for group coverage?

The accurate understanding of group insurance necessitates that a group must be formed for a purpose other than merely obtaining insurance coverage. This requirement ensures that the group is cohesive and has a shared interest that is not solely reliant on securing better insurance rates or coverage terms.

Groups created exclusively for the purpose of obtaining insurance lack the social structure or underlying purpose typically found in qualified groups, such as employer-employee relationships, professional associations, or unions. These groups usually have a common interest or goal that fosters a sense of community and solidarity among their members, which is a critical aspect in the underwriting process for group insurance.

Thus, for a group to qualify for group coverage, it must demonstrate that it was established for legitimate operations beyond securing insurance benefits. This principle helps maintain the integrity and intended function of group insurance.