A type of term insurance plan in which a single policy is used to cover several individuals is called group term life insurance. It offers a cash guarantee to the beneficiary of the group term life insurance policy in the event of the insured's death. It is mostly opted by businesses where the policy is issued to an employer seeking coverage for his/her employees/workers as an incentive.Read more
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A group term life insurance plan refers to a life insurance plan that covers a group of people for a specified term or period in exchange for a fixed rate of premium payment. It provides life coverage to a group of people and pays compensation to the group member’s family if he/she dies during the policy term. The compensation amount is either paid to the family as a lump sum death payout or a monthly payout.
Group term insurance plans are mostly purchased by companies/businesses to provide life insurance coverage to their employees. When an employer purchases a group term life insurance policy for its workers as an incentive, the employer becomes the policyholder and the employee becomes the beneficiary. In the event of an employee's death, the plan provides financial independence to the employee's family by offering them a death payout.
Many employers provide a basic level of group term coverage at no additional expense to their employees. After all, a group term insurance plan is more affordable than buying individual term insurance for each employee. Moreover, they also give their employees the option to buy additional coverage as per their requirements and extend the coverage to the employees' spouses and children.
However, a community insurance scheme is not limited to only employer-employee groups but also includes bank clients, NGOs, professional organizations, non-banking financial institutions, and microfinance institutions.
Employer-provided group term life insurance plans have become an important component of employee compensation packages. Many fraternal organizations provide community term life insurance to their members. Similarly, large and medium-sized businesses and corporations have a single master policy covering all of their employees. For those with financial responsibilities, term life insurance is a must-have product.
Employers cover all their workers under a group life insurance scheme, regardless of age, occupation, or social context. The following are some of the features of a group term life insurance plan:
Group Term Life Insurance Plans are designed to provide life insurance to a group of individuals under a single scheme. In the case of an employee's death, a group term insurance policy provides financial support and freedom to the employee's beneficiaries. It provides various advantages, ranging from universal coverage for all to ranked coverage for different levels of members. Some community insurance plans also cover unpaid debts for a group of creditors, and others offer critical illness and injury coverage. Take a look at the various benefits of group term life insurance plans below:
The group term policy covers members of a community or group simply by being a part of the group. It provides basic coverage to all group members irrespective of whether they have a personal life insurance policy or not.
Employers benefit from the structured approach of accumulating funds for their potential gratuity liability to their workers. A group term insurance scheme makes this easier for employers and offers life insurance coverage to the workers.
Employers and contractors both profit from group term life insurance policies. Death benefits are tax-free according to Section 10(10D) of the Income Tax Act of 1961.
Add-on covers, such as tuition premiums, repatriation allowance, accidental death, and more, can be added to the group term insurance policies to offer a wide range of benefits to the employees in addition to the base cover.
Employees are relieved of the burden of undergoing medical examinations before getting enrolled under group term insurance plans.
A group plan's premium is much lower than that of individual plans because it covers many individuals.
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Employers profit from group term life insurance plans just as much as workers do. Here are some of the benefits of group term life insurance plans to employers:
A group term life insurance policy involves a group administrator paying an initial premium to obtain a master policy. This initial payment provides coverage to all the group's participants for one year. Members of the group have the choice of selecting the sum assured. This sum assured may be paid as a one-time payment or connected to a payroll or loan account. After the policyholder pays the fee, the group members are covered for a year from the policy's start date.
The community life insurance contracts are renewable on an annual basis. Moreover, The premium is calculated based on changes in the size of the group and the age distribution of the group in question.
Employee-employer classes, banks, non-banking financial companies, non-employer – employee groups, specialist groups, and microfinance institutions can buy community term life insurance plans for their working-class/ employees/ group members. The group term insurance eligibility criteria differ for each of these groups. Moreover, the size of the group may also vary from one insurance policy to another. Moreover, the minimum age to enter the plan is usually 18 years old and the maximum age limit ranges from 65 to 69 years.
Although some group term life plans provide uniform and basic coverage to all plan members, others provide supplemental and graded coverage depending on the skilled ranking or role of the plan members.
Some of the group term life insurance plans available in India are as follows:
The Bajaj Allianz Group Term Life Insurance scheme provides up to Rs 1 crore of life insurance coverage to the family of the insured group member in the event of his/her death. This one-of-a-kind group term insurance scheme provides high life insurance coverage without requiring a medical examination.
The plan comes with an add-on cover for critical illnesses that provides coverage of up to Rs 10 lakh in case the insured is diagnosed with critical diseases including cancer, kidney failure, heart attack, and others. It can help the insured to expand their financial security and tailor the group insurance plan as per his/her needs.
The Tata AIA Life Insurance Group Term Life plan helps the insured group member to plan their family’s future expenses and liabilities with an adequate cover that ensures their loved ones have a stable financial base even after their death. This group plan has the following features:
The Future Generali Group Term Life Insurance plan has been designed to provide affordable life insurance cover to all members of a group. Take a look at the features of the plan below:
The IndiaFirst Group Term Life Insurance plan protects the members of a group and secures the future of their families at affordable rates. Given below are some of the features of the plan:
Although a company can provide group life insurance to its workers, it is important to be aware of certain aspects of the policy to get its best value. Take a look at them below: