How Increase or Decrease in Number of Lives Impact GMC Premium

Companies that offer group medical insurance to their employees are already way ahead of the companies that don’t. The number of employees covered under the group plan decides the premium amount that the company has to pay. However, when an employee joins or leaves the company, it impacts the premium amount at the time of renewal.

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  • Employee, spouse & kids

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Reason Behind Impact on Premium

When the company purchases a group health insurance plan for their employees, they purchase it according to the number of employees working in the company at that time. It also depends on the number of claims raised by the employee during the policy tenure. When the number of lives covered under the insurance plan increases the premium amount increases and when the number of lives covered under the plan decreases the premium amount decreases and it is decided at the time of renewal.

Apart from this, some companies also provide group health plans to their employees under which they can cover their dependent family members such as spouses, kids and parents.This also plays a huge role in the renewal GMC premium.

How GMC Renewal Premium is Impacted if there's an increase/decrease in Total Lives?

GMC Renewal premium is directly proportional to the total number of lives available at the time of renewal.

If the total number of lives has increased at the time of renewal then the premium will shoot up and if the total lives have decreased then the premium will come down.

Total Lives at the Policy Renewal also affect the Claims Outgo, the higher the lives at renewal, the more the projected claims outgo which ultimately results in more premium.

Case Scenarios

Here are two scenarios that will help you under the increment and decrement in the premium amount at the time of renewal.

Case 1: If there's an increase in total lives at the Policy Renewal

Total lives at Policy Inception (2021)

Total lives at Policy Expiry (2022)

Total lives for Renewal (2022)

Average Lives

% Increase in Lives






Assuming the Annualized Claims for the Policy Period (365 days) to be Rs 9,00,000.

Considering the Increase in Total Number of Lives at Policy Renewal, the Projected Claims Outgo for Year 2022 will be 9,00,000 X % increase in total lives

₹ 1,260,000

Hence, it is visible that with an increase in total lives the expected claims outgo also increases which results in higher GMC Renewal Premium

Case 2: If there's a decrease in total lives at the Policy Renewal

Total Lives at Policy Inception (2021)

Total Lives at Policy Expiry (2022)

Total Lives for Renewal (2022)

Average Lives

% decrease in Lives






Assuming the Annualized Claims for the Policy Period (365 days) to be Rs 6,50,000.

Considering the Increase in Total Number of Lives at Policy Renewal, the Projected Claims Outgo for the Year 2022 will be a 6,50,000 X % decrease in total lives

₹ 377,000

Hence, it is visible that with a decrease in total lives the expected claims outgo also decreases which results in lower GMC Renewal Premium.

*The GMC renewal premium depends upon multiple factors such as Average Claim Size, Demography including Age, Gender of the Insured Members, Total Approved/Rejected Claims, etc.

Why Is It Recommended to Purchase GMC Online?

It is recommended by insurance experts to purchase the group medical plan online. It is because when you purchase the plan online, you get to know about the inclusions, exclusions, terms and conditions of the policy. Apart from this, it becomes even easier to calculate the premium amount because you can use the online tool to calculate the premium amount.


In order to make it easier to understand you can look at the two case scenarios mentioned above and learn how the increase and decrease in live impacts the GMC premium at the time of renewal. Also, make sure to renew the insurance plan on time to avoid the hassle of purchasing it again.

Written By: PolicyBazaar - Updated: 11 February 2022

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