Group Term Life Insurance Plan

The following are some of the features of Group Life Insurance Plans-

1. Contract Master

The group life insurance policy is a type of insurance that is routinely issued to employees, regardless of whether they have insurance or not. It is a master contract in which an organisation buys a master policy whose premium is determined by the number of members and the sum assured amount chosen by the company.

2. Contributory and Non-Contributory

There are two types of group life insurance: contributory and non-contributory. The employee contributes to the policy by paying a part of the premium, while the employer covers the rest. The premium is fully paid by the employer in the latter instance.

3. Affordable

Individual life insurance is more expensive than group life insurance.This is due to the fact that the insurance company can combine various expenses like administration, operation, and renewal into a single master policy.

4. Tenure

The policy usually has a one-year expiry date. The policy must then be renewed every year after that.

5. Payout for death

In the unfortunate event that an employee dies in an accident, the group life insurance pays the complete guaranteed sum to the nominee selected by the injured individual.

What Are The Benefits Of Group Term Life Insurance Schemes To Employers?

The benefits of a group term life insurance are not just limited to employees. Employers get to benefit from it too. A few of them are listed below.

1. Gratuity Funding

• Group term life insurance helps employers fund their employees’ gratuity liability, which can be relieving. Gratuity funds are specifically used to cover future gratuity payments, thus reducing the pressure on employers.
• The returns on the funds covered depend on the employees’ selection of certain funds.

2. Cost-Effectiveness

• Group term insurance is more cost-effective than individual term insurance schemes. Since employees are not required to undergo additional medical tests, a group insurance can help cut the additional costs, thus enabling them to avail of its benefits without extra efforts.
• Some funds offer both life and disability benefits to employees.

3. Employee Retention

• It helps improve employee retention. By offering to cover employees’ health expenses, employers gain their trust and feel valued by their employers, thus encouraging more employees to retain their positions within the organization.

4. Income Tax Benefits

• Tax benefits. Employer contributions towards group term life insurance are eligible to be declared as tax deductible as a business expense, under Section 80C of the Income Tax Act.

5. Default Insurance Cover

• Employers automatically provide a basic insurance cover for their employees, ensuring financial protection without individual applications

List of Group Term Life Insurance Plans in India

Some of the most beneficial group term life insurance plans in India are offered by the following insurance companies.

• Bajaj Allianz Group Term Life Insurance
• Tata AIA Life Insurance Group Term Life
• Future Generali Group Term Life Insurance plan
• IndiaFirst Group Term Life Insurance plan
• ICICI Pru Group Term Plus
• HDFC Life Group Term Insurance Plan
• PNB MetLife Group Term Life Plus
• Max Life Group Term Life Insurance Plans

How Does It Work?

A group administrator must pay an initial premium to get a master policy under a group term life insurance policy. This one-time payment covers all participants in the group for one year. Members of the group can choose the amount of the sum assured. This amount could be paid as a one-time payment or linked to a salary or loan payment. The group members are covered for a year from the starting date of the policy after the policyholder pays the fee.

Who is Eligible for Group Term Life Insurance?

The following groups of people are eligible for group term life insurance policies: -
Groups of employers and employees

• Employee-non-employer groups
• Banks
• Financial institutions that are not banks
• Institutions that provide microfinance