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What is Group Term insurance? How does it Benefits Both Employers and Employees?

Nowadays, a large number of organizations face a common problem of employee attrition. However, providing group insurance plan to your employees is the best way to deal with this type of issue.

In today’s day and age, a group insurance plan has become an important part of the employee's benefits package.  But, before we start with our discussion on how group insurance benefits both employers and employees.  Let’s talk a little about what is group term insurance.

What is Group Term Insurance?

A group term insurance policy is a specified life insurance product that is specially designed to provide coverage to a large group of people under a single policy. In a group insurance policy, the owner of the policy is the organization or the employer and the policy provides coverage to the members of a particular organization or employers. Due to comprehensive coverage at an affordable premium rate, the popularity of group insurance policy is burgeoning rapidly these days. Moreover, there are several other benefits offered by the group term insurance plan.

Benefits of Group Insurance for Employees

Provides a Comprehensive Insurance Coverage-

Maximum group insurance plans available in the country inevitably provide insurance coverage to the members of the group as long as they continue to be a part of it. A group insurance plan is beneficial for those who can’t afford to purchase a standalone life insurance policy. However, it is important to keep in mind that a group insurance policy terminates once you leave the group.

Affordable Premium Rates-

The premium rates of a group insurance plan are more affordable as compared to the normal life insurance plan because the risk percentage is equally distributed over the entire group. The premium amount is generally split between the employees and the employers and is 30-35% more economical than an individual life insurance plan. Apart from this, there are various other factors that determine the premium rate of the policy like professional risk, average age group, etc.

Provides Coverage to the Employees’ Families -

 A group insurance plan also provides coverage to the family of the insured. So, if you own a group insurance plan then you don’t need to lighten your pocket by purchasing a separate life insurance policy for your family member. The most group insurance plan provides sufficient coverage to the family of the insured i.e. the spouse and the children.

Effortless Payment Option-

The premium of a group insurance plan is directly deducted from the bank account or the salary of the employee. Thus, the process of premium payment is simple and hassle-free. Moreover, it automatically reduced the risk of missing the due date of premium payment.

Rider Option-  

The group term insurance plan also provides an option to expand the coverage of the policy by adding rider benefit at a minimum premium amount. As per your own suitability, you can purchase add-on rider benefits like a personal accidental benefit, critical illness benefit, etc.

Now that you have seen the benefits of group insurance for employees, let’s take a look at the benefits of the group insurance plan for the employers.

Benefits of Group Insurance for Employers

Helps to Deal With Employees Attrition-

According to the experts, buying a group insurance plan for your employees is beneficial as it shows your concern for your employees. It makes them feel valued as their health concerns are being taken care of. Moreover, it also helps an organization to attract more talented employees.

Asset Management and Professional Expertise-

The group insurance policy that incorporates the feature of annuity and gratuity are managed by the professionally experienced insurance experts. Thus, the return on investment is greater for the members who are covered under the group insurance plan.

Increased Productivity-

It helps to create a stress-free environment for the employees and helps them to nurture productivity which in turn benefits the employers by meeting their short and long-term business objective.

It Offers Enormous Savings to the Employers-

Group term insurance provides coverage at a subsidized rate. Thus, this plan benefits the group of individuals who can’t afford to have a standalone life insurance policy.  According to the risk factor of the entire group, the premium amount is calculated by the insurance companies. The premium payment can be contributed in two ways.

  • Either the entire premium amount is paid by the organi zation or the group owner who owns the policy for their employees.

Or,

  • A part of the premium amount is paid by the insurer i.e. the organization or the employers, whereas the rest of the premium amount is paid by the employees or members of the group insurance plan.

Thus, as the best of both worlds, the group term insurance plan not only benefits the employees but also saves the out of the pocket cost of the employers.

Tax Benefit-

The amount contributed by the employers towards the group term insurance plan is eligible for tax deduction under the Income Tax Act. Moreover, the employees who are the member of the policy can also avail the tax benefit.

Wrapping it up!

The success of an organization majorly depends upon the productivity of the employees. If you have a team of motivated and productive employees then it can really benefit your business enormously. By offering group term insurance plan as a part of the employee benefits package you can create a secure environment for your employees and can lift the overall productivity. Moreover, as a crucial part of the employee benefits package, a group insurance plan safeguards the finances of the employees as well as the employers’ at the most affordable rates.