As we mentioned in previous article, many corporations offer competitive packages, and that’s even a strategy in hiring and retaining employees. These competitive packages include group insurance to plans that provide individual retirement accounts or traditional registered pension plans, etc. In this article, we will discuss the advantage and disadvantage of contributory and non-contributory in group insurance plan.

I. Contributory Plan
Under this type of plan, employees contribute a portion of group insurance premium.
1.the Advantages of contribution plan includes
a) Premium contributed by employees increasing over all premium resulting in more comprehensive group insurance plan.
b) the employees have their choices of choosing better group plans
c) Eliminate some excessive claims, which creates high experience ratios causing increase of premium when group plan come to be renewed.
d) In Canada, if the employees pay health care premiums and the premium exceeds 3% of their taxable income for the year, 17% of the amount in excess of the 3% will be returned as a tax credit.
2. Disadvantage
Employees must pay portion of their share of premium out taxable income.

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