Advantages Of Group Life Insurance Explained
Table of Contents
Group life insurance, as the name suggests, offers life insurance cover to a defined group of people such as employees of an organization, members of a professional association, or a housing society all under a single contract or insurance policy. Members of professional associations like Pilots’ Guilds, Medical Associations, NGOs, and various financial institutions are usually covered under the group policies offered by insurance companies.
The main insurance policy, known as the master contract, is in possession of the policy buyer who could be either the employer or an entity like an association or trust, while the policy members are provided with coverage certificates. Group life insurance provides coverage for
- Death of a member
- Permanent disability of a member
- or Both
Types Of Plans
Contributory Plans: Premium is paid by both employer and employee.
Non-Contributory Plans: Premium is paid entirely by the employer.
Benefits Of Group Insurance Plans
The biggest advantage of group life insurance is that it provides cover to all members regardless of gender, age, profession or socio-economic background as long as they are a part of the group seeking insurance cover. There are several other benefits, as well.
- Cost-Effective: Premiums of a group insurance policy will always be lower than that of an individual policy.
- Annuity: Some group insurance plans provide members with superannuation or retirement plans that may be availed as pensions, post-retirement.
- Gratuity: Members of the group are eligible for gratuity as a cover in case of retirement or resignation, provided they have worked for a minimum of 5 years in the organization. The fund flow in group insurance helps employers to create a gratuity corpus through various investment options.
- Liability Cover: Group insurance can provide cover for unpaid dues or loans in case of death or disability of a participating member.
- Long-term Savings: It helps members with financial protection for long-term needs like a child’s education or care for seniors.
Conclusion
If you are a part of an organization or association, group insurance may be beneficial as it may provide a fairly decent risk cover with a minimal contribution. As always, it is advisable to purchase insurance only after a thorough understanding of all terms and conditions.
Also read- In Summary, A Guide To Term Insurance Riders
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