Quora Answer: What is Stopping Me from Creating a Group Insurance with Random People?

The following is my answer to a Quora question: “What is stopping me from gathering a group of people that do not have an insurance, and creating a group insurance with them?”

What you can do legally, is to register a company, and name these people as shareholders, directors and staff, depending.  Thereafter, get a group health policy owned by the company covering these people.  I do not see it being feasible for strangers, but it is what some people do for family groups.  Depending on where you are, the minimum number of people for such a policy varies, but it is generally four or five.

In many places, due to the nature of the portfolio pricing of such policies, pre-existing conditions can be covered, or are covered after a waiting period.  The disadvantage is that the coverage is never as comprehensive as an individual policy.  Also, there is the possibility that part of that coverage is portable, meaning that people who leave the company after a certain period of time can bring that coverage with them, and convert it to individual coverage.

Regarding the premiums, for it to be feasible, the majority of the life insured should be young, with little or no claim history.  Otherwise, there will be loading, and the renewal premiums can jump as much as 150%, or more.