Pros And Cons Of Buying Group Term Insurance Plans

Having a proper life insurance policy via your place of employment seems incredibly simple and easy. Many firms provide their workers’ group term life insurance contracts at little or no cost. Instead of having their own personal life insurance, more employees are really insured by such workplace insurance programmes. Since many members contribute to the group policy, group life insurance is reasonably priced and may even be free. Before receiving coverage, several organisations ask group members to engage for a set period of time, which is usually quite simple.

What Is A Group Term Insurance Plan?

When numerous persons or a group of people are covered by a single life insurance policy, the phrase "group term life insurance" is used. In the event that the insured person passes away during the policy term, the group term plans are designed to provide financial security to the nominee or beneficiary.

The most typical instance of group term life insurance is when a business offers term insurance to all of its workers as part of a single plan or agreement. The employer receives the contract and then provides coverage to the employees. These plans also feature a master policyholder, in this instance the employer, who serves as a central administrator on behalf of the group's members.

Pros Of Group Term Insurance Plan

Below we have listed some of the benefits of term plans - 

For Employees - 

• Initial Low-Cost Coverage

Plans for group life insurance offer each member of the group covered by them an affordable level of insurance protection. Group life insurance policies are more affordable than individual life insurance plans and give employees default life insurance coverage, frequently as a perk.

• Requirements 

Before granting individual life insurance policies, the insurance company takes into account a number of variables, including lifestyle choices and medical history. Contrarily, there aren't any requirements to get group life insurance coverage. For group plans, for instance, a pre-medical examination is not a requirement (for up to a specific cover limit).

• Smooth Claim-Settlement Procedure

A group life insurance policy often has a rapid and simple claim settlement procedure. Only the necessary paperwork has to be submitted by the employee or their beneficiaries to start the claim settlement procedure.

For Employers - 

• Low Premiums

Employers often cover the costs of a group life insurance policy's premiums. Employers can greatly reduce their costs by choosing group insurance plans to cover the same number of employees rather than individual life insurance policies.

• High Retention of Employees

Employers may lower staff turnover while raising retention and loyalty by offering the security of a group life insurance policy as incentives.

• Positive work morale

Employees benefit from the comfort and assurance offered by a group life insurance policy since it keeps them from feeling stressed and allows them to concentrate on the pressing duties at hand.

• Tax Advantages

According to the appropriate provisions of Indian income tax regulations, premiums paid for group life insurance plans are tax deductible.

Cons Of Group Term Insurance Plan

Following are some of the drawbacks of group term plans - 

1. There are limitations on personalising the plan according to individual preferences because the employer determines the premium and sum guaranteed. 
2. The person has no influence over their policies. 
3. The employer has also chosen a low level of coverage. If the insured employee chooses to change jobs or quit their current position, the coverage will not continue.

Conclusion

One term insurance contract is provided to cover a number of persons under group term life insurance. The most typical type of group is a business, where the contract is given to the employer, who then provides coverage to employees as a perk. As part of a benefits package, many firms provide essential group term life insurance to employees at no charge. Having both a group term life insurance policy and an individual life insurance policy at the same time is feasible and could even be wise.

Also read: Everything You Need To Know About The Age Restrictions In Term Insurance

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