What is Group Insurance?
A group insurance policy is provided by the organization as part of the benefit program to its group members. Group insurance policy offers coverage to a defined group of people. They may include members of a club, professional association, co-operative societies, banks and employees of a company or organization amongst others.
Types of Groups
There are two types of groups covered under a group insurance plan. They are -
Formal groups refer to the groups where all the members of the group work for the same employer or group owner. It is also known as the employee-employer group and covers groups such as companies, business organizations, professional organizations, etc. Under this type of group, the policy is purchased by the employer.
Informal groups refer to the groups where all members of the group do not work for the same employer. Also considered as non-employee -employer group, the insurance policy in such groups is purchased by the group administrator on behalf of all the members. This type of group includes members of the same societies, cultural associations as well as same holders of same credit cards.
Features of Group Insurance
All group insurance plans consist of certain features that make it different from an individual insurance policy. Below are some of the most attractive features of a group insurance scheme:
- All Group Members Covered - A group insurance policy covers all the members of a group under one policy, no matter the size of the group.
- Standardised Coverage - The coverage provided under the group insurance scheme remains the same for all members of the group, irrespective of their age, position or economic status.
- Groups of All Sizes Covered - Most group insurance plans provide coverage to all groups irrespective of how big the group may be in size. Whether the group comprises of seven or 300 members, there will be a group insurance policy to cover them.
- Coverage Ends Upon Leaving Group - The insured group member is covered under a group insurance scheme as long as he is part of the group. His coverage will end as soon as he leaves the group.
Benefits of Group Insurance Scheme
Group insurance plans come with their own sets of benefits. They provide benefits to not only the employees covered under the group insurance policy but also to the employers. Take a look at why buying a group insurance policy is beneficial for organizations and their members:
Benefits to the Organizations:
- Lower Premium – The premium paid for a group insurance scheme is much lower than the combined premium paid for individual policy by each member. This is because the overall risk is spread across all the members of the group, which reduces the liability of the insurance company.
- Increases Group Loyalty – Providing coverage to all the members of a group under a group insurance scheme helps to increase the loyalty of the group members/ employees for the group/ organization and helps to retain them. This is because the group member will feel valued and will want to continue his association with the group.
- Tax Benefits – A group insurance policy comes with benefits on income tax. The policyholder can avail returns on the premium paid for the scheme while filing his income tax.
- Motivates the Members – If an organization covers its members under a group insurance scheme, its members are able to work without stress-free. They focus on their work better and give their 100 per cent. Thus, a group insurance scheme motivates them to work hard and perform better.
- Policy Customization – A group insurance policy can be customized as per different kinds sub-groups under the organization based on their designation, salary, marital status, etc. of the group members.
Benefits to the Group Members:
- Affordable for All – A group insurance scheme enables people from lower-income groups who cannot afford individual insurance to stay protected as premiums for group insurance plans are either very low or are paid by the group owners/ employers.
- Extended to Families – Many group insurance plans extend their coverage to include the family members of the group member. For instance, most group health insurance policies cover the spouse, dependent children and parents of the group member.
- Standard Coverage for all Members – Under a group insurance scheme, all the members of the organization or group are granted with the same level of coverage irrespective of their position, age, income or gender. Thus, a group insurance scheme helps people with lower economic background to obtain coverage at par with those belonging to the higher income groups.
- No Pre-Policy Entry Conditions – Group insurance plans do not require the members to fulfil any pre-requisite conditions, such as appearing for a medical check-up, before getting enrolled in a group insurance policy. In contrast, many individuals plans may require them to undergo a health check-up before being issued a policy.
- Conversion into Individual Plan – Many insurance providers allow group members to convert their group insurance scheme into individual policy if they are leaving the group. However, they will be required to pay a conversion fee.
Types of Group Insurance Plans
There are four types of group insurance plans offered by insurance companies in India:
- Group Life Insurance
- Group Health Insurance
- Group Personal Accident Insurance
- Group Travel Insurance
Take a look at all four types of group insurance plans in detail.
Group Life Insurance
Group life insurance is a type of group insurance policy that provides term life insurance or death benefit to the members of a group for a fixed period of time. In case any group member dies in an accident or naturally, then his nominee will be eligible to get compensation equivalent to the sum assured or life cover. However, it does not provide any return benefit or savings if the insured member survives until the maturity period. It is one of the most common types of group insurance plans and is issued as an annual term plan that can be renewed.
Features and Benefits of Group Life Insurance
Here are some of the most common features and benefits of group life insurance:
- It comes with basic coverage that is usually once or twice the salary of the group member.
- It is usually purchased by large organizations or employers for their employees.
- It is available to the employees at a very low rate of premium or for free.
- The group owner/ organization who purchases the group insurance policy is issued a master contract and the group members are given a certificate of insurance.
- It helps the employer or organization to build gratuity funds for their employees or group members.
- It does not require the members to undertake a health check-up before getting covered under the group insurance scheme.
Group Health Insurance
Group health insurance is a type of group insurance policy that provides health coverage to all the members of the group. It covers sickness and accidental hospitalization expenses, ambulance charges and day care procedures amongst other medical expenses.
Features and Benefits of Group Health Insurance
Below are the various features and benefits available under a group health insurance plan:
- It provides medical coverage to the group member as well as his family members.
- It comes with a waiver for pre-existing diseases’ waiting period allowing you to obtain coverage for such diseases from day 1, unlike an individual health policy.
- It covers maternity expenses and covers a newborn baby from day 1 after a waiting period of nine months only as opposed to an individual health plan.
- It comes with the feature of availing cashless treatment facility at network hospitals of the insurance company.
Group Personal Accident Insurance
Group personal accident insurance is a type of group insurance policy that covers the group members in case an accident leads to their death or causes disability. It provides compensation in case the insured group member suffers from permanent total/ partial disability as well as in the case of temporary total disability.
Features and Benefits of Group Personal Accident Insurance
Following is the list of some of the most lucrative features and benefits of group personal accident insurance:
- It aids the insured member or his family to cover the large expenses incurred due to death or disablement.
- Several insurers offer this insurance with worldwide cover.
- It comes with add-on covers, such as medical expenses, transportation of mortal remains, children’s education allowance, etc.
- Many insurance providers provide the option of choosing either on-duty or off-duty cover under a group insurance scheme.
Group Travel Insurance
Group travel insurance is a type of group insurance policy that covers a group of people travelling together against any unforeseen medical or non-medical contingencies. It provides coverage for medical expenses, personal accident, baggage loss, passport loss, personal liability, flight delays, trip delays and cancellations amongst others. The coverage for this type of group insurance scheme begins as soon as the trip starts and ends as soon as the group members return home.
Features and Benefits of Group Travel Insurance
Take a look at the several interesting features and benefits of group travel insurance:
- It is available for domestic as well as international travel.
- It covers medical, travel-related and other types of emergencies faced while travelling.
- It comes with a single sum insured amount that covers all the group members on floater basis.
- It helps the insured group members to travel without worrying about what would happen next.
- It provides global coverage and therefore, comes to the rescue of the insured no matter which country they have travelled to.
Why do Companies Prefer Group Insurance Plans?
Most companies prefer to opt for group insurance plans instead of individual insurance plans for their employees. Take a look at why companies prefer to cover all their employees under a group insurance scheme:
- Cost Savings - Buying a group insurance policy is more economical for the companies as it can ensure insurance coverage for all its employees at a lower cost. Premiums for individual insurance is higher than those for group insurance plans and thus, companies end up saving their costs by opting for group insurance plans for its employees.
- Wider Coverage at Lower Cost - Group insurance plans allow the group members to get wider coverage at a lower cost. This is because the risk gets divided with more number of people and thus, the plans are available at a lower premium amount. Moreover, certain covers may come at an extra cost in individual plans as opposed to group insurance plans. For instance coverage for pre-existing diseases can be availed easily under group health insurance plans.
- Tax Incentives - Companies that pay premiums for group health insurance policies get tax incentives while filing their income tax. They are able to get tax returns for paying premiums on health insurance plans for their employees.
- Satisfied Employees and Positive Environment - Covering all the employees under a group insurance scheme enables the companies to build a happy and positive work environment. This is because employees feel that their employer cares for their well-being and develop a feeling of belongingness for the company.
Eligibility Criteria for Group Insurance Scheme
Different types of group insurance plans come with varying eligibility criteria. Below is the list of some of the most common eligibility requirements under a group insurance policy:
- All the members should be active/ full-time member of the group
- Minimum entry age for the members should be 18 years
- Maximum entry age may vary as per the group insurance scheme. Some group insurance plans allow members with a maximum of 60 years to enrol in a group plan. On the other hand, few group plans may have a maximum entry age of 80 years
- Similarly, the minimum number of group members may vary from one group insurance scheme to another. While some group insurance plans may have a requirement of at least seven members in a group to buy this plan, others may need a minimum of 50 members to qualify for a group insurance policy.
Claim Process of Group Insurance Policy
The claim process for a group insurance policy is very simple and quick. The insurance provider must be informed about the emergency at the earliest. All the required documents should be submitted to the insurer, including claim form. The insurance company will verify the claim as per the coverage available under the group insurance scheme. Post verification, the claim amount will be paid to the group member or his nominee as per the situation.
Following is the list of documents that an insured group member will have to submit at the time of registering a claim under a group insurance scheme:
Group Life Insurance:
- Duly filled-in group life insurance claim form
- Insurance certificate
- Original death certificate of the member, attested by the municipal authority
- NEFT mandate form filled by policyholder/ nominee
- Cancelled cheque or bank passbook
- Physician’s statement and medical records (in case of natural death)
- Copy of police FIR and post mortem report (in case of an accident or unnatural death)
Group Health Insurance:
- Duly filled-in group health insurance claim form
- Medical reports
- Doctor’s statement suggesting the line of treatment
- Hospital discharge card
- Hospital bill and payment receipts
- Copy of police report (in case of an accident)
Group Personal Accident Insurance:
- Duly filled-in group personal accident insurance claim form
- Copy of police FIR report
- Disability certificate of the member from a reputed doctor or municipal hospital (in case of permanent disability)
- Death certificate of the member (in case of death)
- Attending doctor’s statement and medical reports (in case of disability)
- Leave certificate from the employer/ organization (in case of temporary total disability)
- Post mortem report (in case of death)
Group Travel Insurance:
- Duly filled-in group travel insurance claim form
- Copy of the group member’s passport
- Copy of boarding pass and baggage slips of the group member
- Identity proof of the group member, such as PAN card, Aadhaar card, etc. (in case the claim amount is for more than Rs 1 lakh)
- Copy of police FIR report (in case of theft or loss claims)
- Property Irregularity Report (PIR) and details of compensation received from the airline (in case of baggage loss)
- NEFT details of the group member and cancelled cheques
Why Choose Policybazaar for Group Insurance?
There is no dearth of insurance companies offering group insurance plans in India. Given the variety of plans, it can get difficult for an organization to find a group insurance scheme that best suits the requirements of its group members. Here is where Policybazaar comes to the rescue.
Policybazaar is an insurance broker that allows organizations or employers to view all group insurance plans offered by different insurance companies at one place. It enables them to compare and assess the coverage provided by the different group insurance plans available in India.
Moreover, it also provides premium quotes for different group insurance plans. Thus, the employer or organization can compare the premium quotes against the coverage offered by different insurance companies. This way they will be able to select the best group insurance scheme for their group.
Group Insurance Scheme - FAQs
There are four types of group insurance plans that offer coverage for different purposes. The type of group insurance scheme that best suits your group’s requirements will be the best for your organization. You should assess the risks of your group members and decide the kind of group insurance policy that will provide adequate coverage to the whole group. Thereafter, you can compare group insurance plans offered by different insurance companies on the basis of their covers and premium quotes to choose the ideal group insurance policy for your organization.
Yes. Several insurance providers in India offer group insurance plans that can be customized as per the individual needs of the group at no extra cost. Thus, you can customize your group insurance policy on the basis of salary, designation, etc.
The minimum group members required to purchase a group insurance scheme varies from one plan to another. While some plans allow groups of minimum seven or 10 members to buy group policies, other plans require a group of a minimum of 50 members to be eligible to buy a group insurance policy.
Different types of group insurance plans come with different sets of exclusions. For instance, group health insurance mostly does not provide death benefit which is not the case in group life insurance. Therefore, it is best to decide the kind of group insurance scheme you want to purchase and then carefully go through what is covered and not covered under the group insurance policy.
Those who pay the premium amount for the group insurance policy will be able to claim income tax returns on it. For instance, if the premium for the group insurance scheme was paid by the organization or the employer then only they can claim it while filing income tax. In such a case, the employees or the group members cannot claim the premium under tax returns as the premium amount was not paid by them.
The level of coverage varies one kind of group insurance plans to another. For example, group travel insurance covers loss of check-in baggage and flight delays that are not offered by any other kind of group insurance scheme. Therefore, you should decide the type of group insurance policy that you require for your group members and then read the coverage available.
Group term plan is another name for group term life insurance that provides coverage to all the members of a group under one single policy. This type of group insurance policy provides life cover in case the group member dies within the policy period but does not provide any return benefit if he survives the until maturity.