Group Term Life Insurance Plans, as the name suggests, are designed to offer life insurance to a group of people under a single policy. A group insurance policy is not restricted to merely employer-employee groups but is also extended to other groups such as customers of banks, NGOs, professional groups, non-banking financial institutions, and microfinance institutions.
A group insurance policy for employees assures financial assistance and independence to the beneficiaries of the concerned employee, in the event of his or her death. It offers multifarious benefits, from uniform cover to all, to ranked covers to various grades of members. Some group insurance schemes also provide covers for outstanding loans to a group of borrowers, while some come with critical illness and disability benefits.
Here are the benefits of Group Term Life Insurance plans to employers as well as employees:
1. Default Insurance Cover
A group insurance policy provides insurance cover to members by simply being part of the group. It ensures basic insurance to cover those who do not have a personal life insurance policy.
2. Gratuity Funding
Employers are aided with a systematic method of building up funds for their future gratuity liability towards the employees. A group insurance policy assists the employers with the same, along with providing life insurance cover to employees, with greater ease.
3. Tax Benefits
Group Term Life Insurance plans offer tax benefits to both employers and employees. As per prevailing Tax Laws, Death benefits are exempt from tax under Section 10(10D) of the Income Tax Act, 1961. Moreover, group insurance plans are doubly effective - in employee welfare as well as retention.
4. Customizable to suit employee needs
Group insurance policy coverage can be extended with add-ons like education allowance, repatriation allowance, accidental death and more, thus covering a multitude of benefits along with the base cover.
5. No medical check-ups
Employees are relieved from the hassle of going through medical check-ups under Group Term Insurance Plans.
Since a group plan entails insurance cover for many people, its premium is much lower as compared to individual policies.
Undoubtedly, a group insurance policy is a smarter way to avail insurance protection against multiple risk factors, let alone life. Start by assessing the right group plan.
Disclaimer: Life Insurance coverage is available in this product. It is a group insurance plan which provides only death benefit and no maturity or surrender benefit. For more details on the risk factors, terms and conditions, please read the product sales brochure carefully before concluding a sale.
Q. I already have an existing term insurance plan. An I eligible for a group term insurance plan?
You may be eligible for your employer’s group term insurance plan even if you have an existing term insurance cover. You are allowed to have 2 term insurance plans as long as you meet all applicable inclusion and exclusion criteria related to both the policies.
Q. What is the tenure of a group life insurance plan?
The default tenure of a group term plan is 1 year. But the group term policy can be renewed every year.
Q. Are there any tax benefits of a group term insurance plan?
Typically, the premiums for a group term insurance plan are paid by the employer, so you cannot claim any tax benefit. However, if the premium for the group term plan is deducted from your salary, you can claim tax benefit on the amount paid.
Q – I already have a group term plan provided by my employer. Do I need to get a separate term plan too?
While a group term plan does provide your family some financial security in case of your untimely demise, this policy will cease if you change jobs, are laid off or if you retire. So, to ensure that your family’s financial interests are better protected against various risks, you should definitely consider purchasing a personal term plan.
Q- What is the maximum age of entry for a group term insurance plan?
Under existing rules, individuals up to 69 years of age can enroll into a group term insurance plan provided by their employer.
Savings mentioned are indicative of the maximum premium difference when the same plan/variant is bought offline