Group insurance is the coverage provided to the employees of an organisation under a single policy. We all know that term life insurance is the simplest method to get protection from the financial distress that our family would face in case of our unfortunate demise. The term life policy is the most affordable policy type because it considers a long policy term and low premium amount.
 

Term life policies are also possible for a group of persons. Although group term life policies can be taken for any given group of persons, whether family members or employees, policies covering employees are more widely used.
 

What is a Group Term Life Insurance Plan?
 

A group term life insurance plan consists of life coverage offered to a group of individuals under the policy. Therefore, if any group member dies or is rendered disabled, their nominee would receive the death benefit or the paid-up value as the case may be. 
 

How to Save Money On a Group Term Life Insurance?

There are various ways to save money while you buy a group term life insurance plan. These include
 

• Lesser premiums: The premiums of group term insurance plans are lesser than the premium of individual term plans for people in a group. Since all the members are covered under a single policy, the premium is lesser than the premium of individual term plans for each member.
  
  
• Cost-effective: Group employee plans are economical as compared to individual policies. Many people are covered under a single policy which reduces the paperwork and administrative costs, thus making plans cost-effective.
  
  
• Insurance cover: A group employee plan provides coverage to the members who are a part of an organisation. The plan is beneficial for the employees who do not have personal insurance cover. Even if the employee has a term policy on their own, participation in the group term life policy at work provides more significant benefits at a lesser cost. Many companies pay the premium on behalf of the employee, which is a great incentive.
  
  
• Gratuity funding: With a group term life insurance plan, employees can build up funds for their future gratuity liability towards the employees. The group term plan helps the employers in this way, along with providing life cover to the employees. A group insurance policy can also provide for other statutory liabilities like leave encashment, superannuation, etc.
  
  
• Customisation of the plan: The coverage of group insurance plans can be enhanced with riders^# like education allowance, accidental death, critical illness, etc. These add-ons multiply the benefits the employees get along with the base cover at an affordable premium.
  
  
• Tax benefits: The employer and the employee can receive tax^* benefits under a group term insurance plan. The premium payable on the group term life insurance plan is a tax-deductible expense for the employer as it forms part of the employee benefits offered. Moreover, the death benefit received under the group term plan is also tax^*-exempt under Section 10(10D) of the Income Tax Act, 1961.
  
  

Therefore, with these benefits and features of a group insurance policy, both employees and employers can save money on a group term life insurance plan.
 

Who Can Take Group Insurance?
 

The employer can purchase a group term insurance plan for their employees and pay the premium annually. The employer is called the Master Policyholder and the administrator of the plan. Employees may be added under the policy as they join the organisation. Further, employees who leave the organisation may be struck off from the list of beneficiaries.
 

How Do Employee Group Insurance Plans Work?
 

The employer has to determine the funding corpus for the various financial outflows related to the statutory and contractual liabilities for the employees. Based on this computation, the premium paid can be ascertained, and on payment of the regular premium, the amount is invested in various funds and
 

On the employee’s death, the sum assured and other accrued fund value will be paid to their nominee. If the employee were to leave on retirement or resignation, the fund value would be computed on the date of separation and paid to the employee.
 

Conclusion
 

Group term insurance plans are an important method for the employers to meet two important objectives: payment of death benefit to employees who die while in the company’s service and to meet the funding needs for statutory obligations that arise with the employment contract, such as gratuity. By linking the funds invested under the policy to different kinds of funds, both capital appreciation and regular returns can be achieved. Both will help the employer meet their commitments with ease. The group plans are an additional layer of protection for their families for the employees.
 

L&C/Advt/2023/Jan/0296