Free Cover Limit (FCL), explained
In group term life insurance, the Free Cover Limit is the sum assured each employee gets without any medical test or health evidence. Cover up to the FCL is granted automatically on joining; only the sum assured above it needs underwriting.
Key takeaway
The FCL is why group life needs no medical tests for most employees — as long as their sum assured sits at or below the limit, they’re covered from day one with zero paperwork.
How it works
Individual term insurance is underwritten person by person — medicals, health questionnaires, waiting for a decision. Group term life avoids most of that using the Free Cover Limit. The insurer looks at the group as a whole — its size, age profile and average sum assured — and sets one FCL figure per member, say ₹50,00,000. Every employee whose cover is at or below that figure is insured automatically, with no medical test and no individual health evidence.
Because group life pools risk across many people, larger groups generally get a higher FCL. A big team can often cover almost everyone within the limit; a small team may get a more modest FCL or a little more underwriting. The FCL is reviewed at renewal as the group’s size and profile change.
Where an employee’s sum assured exceeds the FCL — often senior staff on a high salary multiple — only the excess is underwritten. They stay covered up to the FCL while a health declaration (and, for larger amounts, a medical) is completed for the portion above it.
A worked example
A group term life scheme has a Free Cover Limit of ₹50,00,000. Consider two employees on a 10× salary formula:
| Employee A — ₹4,00,000 salary → ₹40,00,000 sum assured | Fully within FCL — no medicals |
| Employee B — ₹8,00,000 salary → ₹80,00,000 sum assured | Underwrite only ₹30,00,000 above FCL |
| Employee B — cover while underwriting the excess | Insured up to ₹50,00,000 (the FCL) |
Employee A is covered in full with no medical step. Employee B is covered up to ₹50,00,000 immediately; the ₹30,00,000 above the FCL is granted once a short health declaration (or medical) is completed. For most teams, the large majority of employees sit entirely within the FCL.
Why it matters for employers
The FCL is the practical reason group term life is so much easier to run than individual cover. A high FCL means new joiners are protected from day one with almost no paperwork, HR isn’t chasing medical appointments, and cover keeps pace with hiring. It is also a genuine advantage for employees who might struggle to get affordable individual term cover because of their age or health.
When comparing GTL quotes, look at the FCL, not just the premium. A scheme with a higher free cover limit covers more of your team instantly. If your sum-assured formula pushes several senior people above the FCL, plan for a brief underwriting step for those few — everyone else is covered automatically. This sits on top of the statutory EDLI benefit under the EPF Act.
How Onsurity handles it
Onsurity’s group term life cover is issued on a group basis, so the large majority of employees are covered within the Free Cover Limit with no medical tests and no health declarations. New joiners are added from their date of joining through the TeamSure dashboard, with cover live from that date up to the FCL.
Where a senior employee’s sum assured runs above the FCL, Onsurity’s team manages the short underwriting step for the excess and keeps the base cover in force throughout. We help employers set a sum-assured formula that keeps as much of the team as possible within the free limit.
Related terms
- Sum insured
The wider idea of a cover ceiling, applied to health cover.
- EDLI
The statutory EPF life benefit a group term life scheme sits above.
- Group Term Life insurance
How Onsurity structures GTL sum assured and FCL for teams.
- GMC vs GPA vs GTL
Where group term life fits against health and accident cover.
Frequently asked questions
What is the Free Cover Limit in simple terms?
The Free Cover Limit (FCL) is the maximum sum assured the insurer will grant each employee under a group term life policy without asking them to take a medical test or submit detailed health evidence. As long as an employee’s cover is at or below the FCL, they are covered automatically on joining — no health declaration, no delay.
How is the FCL decided?
The insurer sets the FCL for the whole group based on the number of members, the average sum assured, the age profile and the type of scheme. Larger groups spread risk better, so they usually get a higher FCL. It is expressed as a single rupee figure per member — for example ₹50,00,000 or ₹1,00,00,000 — that applies across the group.
What happens if an employee’s cover is above the FCL?
The portion of sum assured up to the FCL is granted freely; the amount above it is subject to individual underwriting — typically a health declaration and, for larger excess amounts, medical tests. The employee is still covered up to the FCL while that underwriting is completed, so there is no gap for the bulk of their cover.
Does a bigger group always mean a higher FCL?
Generally yes. Because group life pools risk, a scheme with more members lets the insurer offer a higher free cover limit for the same comfort level. A very small group may get a modest FCL or more underwriting, while a large group can often cover almost everyone within the FCL. Group size, age mix and the sum-assured formula all feed into it.
Why does the FCL matter to employers?
It decides how much of your team is covered instantly versus how many face medical underwriting. A well-set FCL means new joiners are protected from day one with minimal paperwork — important for morale and for HR’s workload. If your sum-assured formula pushes senior staff above the FCL, you should plan for a short underwriting step for those few.
Cover your team without the medical tests
Get a group term life quote and we’ll show you the Free Cover Limit for your team size — so most of your people are covered from day one.
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