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What is Group Term Life Insurance India?
Group Term Life Insurance policies offer term insurance policies to a group of people who are a part of the same organization, institution, club, society, bank or any other group. It’s basically a financial guarantee that’s given to the policyholders that their family members will stay protected in the unfortunate event of their death.
This insurance plan in most cases is offered by employers to employees as it benefits both in the long-term.
Which Groups are eligible for a Group Insurance Policy in India?
Group term life insurance policy covers the following groups:
- Employer-employee groups
- Non employer- employee groups
- Non-banking financial institutions
- Professional groups
- Microfinance institutions
- Clubs and associations
- Professional groups
Merits of a Group Term Insurance Plan
- Group insurance plans are cost-effective. Instead of charging premium on the basis of term, group term life insurance companies incrementally charge premium based on when the policyholders reach a certain age.
- It is a great way to provide an extra layer of security to the employee’s existing plans.
- It also serves as an extra benefit to retain and motivate the employees and attract new people to the organisation as well.
Drawbacks of a Group Term Insurance Plan
- Group insurance plans can serve great as a supplement but are not enough to fully cover them financially in case of a mishap.
- These policies provide coverage based on many factors like the employee’s salary, the organization’s capacity, employee’s status and group, etc. so its financial cover is limited as well.
- Most policies are contingent upon the tenure of the employee in the organization and will not secure them if they choose to terminate the employment. Later, it’s much more expensive to get an individual insurance policy.
Essence of a Group Term Life Insurance Policy
- All members of a certain group can be awarded with these policies contingent on some internal and external factors.
- Pre-medical screening is not required.
- There is no maturity value given to the policyholders.
- Basic coverage is for death and some additional benefits can also be included by paying extra premium.
Vital features of a Group Term Life Insurance Policy
- New members can be added to the policy as they keep joining.
- The whole amount of sum assured is paid to the nominee in the event of death of a policyholder.
- Critical illnesses rider, accidental death rider, disabilities rider, etc. can be included as add-on benefits of the policy with an additional premium.
- Everything from the application process to the claim process is quick and simple.
- The minimum size of the group is usually 50 members.
- A built-in benefit is also provided in case of a terminal illness suffered by an employee.
- Much more affordable than buying any individual term life insurance policy.
- Employees can enjoy extra benefits and financial security and the cost for this is none or very little.
- It builds a good connection and trust between the employers and employees of the organizations.
Benefits of Group Term Life Insurance Policy Covers to Employees
- Default financial cover:
Simply by being part of a group, group term life insurance policy covers your financial risks. It serves as an extra safety layer to those who already have other insurance plans and ensures financial protection of those who didn’t have it in the past.
- Tax deductions:
Tax benefits are another major advantage of a group term life insurance policy. These tax savings are applicable to both employers and employees.
- Flexible terms for employee needs:
According to the requirements of your employees, a multitude of add-on benefits can be included in your policy with a death cover. These include financial cover for critical illness, education, repatriation, accidents and more.
- Pre-medical checkups are need required:
Unlike an individual term insurance plan which quotes your premium after performing a complete medical screening, a group term life insurance plan can be easily taken without any tests and hassles.
This is one of the most significant advantages offered by a Group Term Life Insurance Policy. It is cost- effective for both the employees and employers and provides them with good financial coverage.
- Secures the employee’s family:
In the off-chance that any unfortunate event leads to the death of the employee, their family will at least be able to recover some of the financial loss that they will have to suffer. This is especially important when the employee is the primary or sole earner of the family. Hence, it secures the future of the insured’s family from monetary losses.
Benefits of Group Term Life Insurance Policy Covers to Employers
- Gratuity benefits:
All employers have a gratuity liability towards their employees that builds up year after year. Many group term life insurance companies help the employers with providing gratuity funding for their employees at ease along with providing a life insurance cover.
- Tax savings:
As mentioned above, both employers and employees will be able to save some tax money by buying a Group Term Life Insurance Policy.
- Return on investment:
According to the kind of funds that a client invests, he will also gain some returns from this fund for a long period of time.
- Deduction in costs:
If the funds chosen by the employer perform better than others, they will earn better returns and it will become even more affordable to the employers.
These funds are very effective for motivating the employees to work better and earn more benefits as well as retaining them in the organization for a longer period of time.
- Enhances the goodwill of an organization:
Since insurance is one of the essential requirements of modern-day employees, they consider it a prerequisite of joining an organization. If these needs are satisfied, employees will stay happy and the workplace environment will be much better. This helps in building the organization’s reputation and also helps in expansion of the organization.
- Builds a strong connect between employers and employees:
When an organisation goes out of their way to give additional benefits like life insurance to their employees, it really shows that they care not only for them but also their families. This helps the employees in trusting and connecting better with their employers.
- Group Term Life Insurance buy online:
The process of buying a Group Term Life Insurance Policy is now available online. You can get free quotes from web aggregators, go through the features and terms of different companies and easily buy the best group term life insurance policy based on your needs. Hence, this process is digital, easy and hassle-free.