Many organisations are taking care of their employees’ interests by offering them several benefits. Group term insurance for the workers is one of the benefits given by organisations. It helps keep the employees motivated and retain talent. With low-cost premiums, the plan has immense benefits for the employees and the employer. Find out what a group term life insurance policy is and its advantages.
What is Group Term Life Insurance?
As the name implies, a group term insurance plan is life insurance covering a group of individuals under a single policy. It may include employees of an organisation, customers of banks or other financial institutions, NGOs, etc. So, a group term plan is not limited to an employer and employee. With regular premium payments, group term life insurance ensures the financial security of your loved ones through a death benefit in case of an eventuality.
Features of a Group Term Insurance Policy
In a group term life insurance, usually, the employer is the owner of the policy. It offers comprehensive benefits to the employees depending on the extent of coverage. Some features of a group insurance policy are as follows:
A group term life insurance covers several people irrespective of age, gender, etc.
Usually, the employer provides you with a term life insurance free of cost and handles the premiums. But premiums are deducted from your payroll if it’s not provided free of cost by the employer.
You may get the option to extend the coverage of the term plan by choosing a deduction in your payroll.
Usually, the premium of a group term life insurance policy is lower than an individual term plan which makes it a cost-effective provision.
Some group life insurance plans provide coverage for your outstanding loans such as home, education, car loans, etc.
The coverage of the term plan may vary according to your hierarchy level in the organisation.
A few term insurance plans may offer you the advantage of adding riders1 such as coverage for disability, critical illness, etc.
You can add any new family member under the term plan at any time.
Usually, group insurance plans end when you leave the company or organisation. But some companies offer the advantage of the portability of the policy with revision of premiums.
What are the Benefits of Group Term Life Insurance?
A group term insurance provides a cost-effective life insurance cover to the employees. But it has more benefits to offer which are as follows:
Life insurance at low premiums: The premiums of a group insurance plan are lower than individual life covers. This is due to the enhanced spread of risks and premiums. Also, if the plan is not provided free of cost, you do not have to worry about the premium payments as it is deducted from your payroll.
Financial security for loved ones: The group term insurance ensures the financial interests of your family are taken care of in an unfortunate event.
Easy documentation: The documentation procedure of the group plan is quite simple. Most of the formalities are fulfilled by the organisation making the process hassle-free.
Default coverage: A group plan covers all eligible employees and there is no need for separate underwritings. With no medical examinations to assess individual employee traits, the plan is less cumbersome.
Tax* benefits: The group life insurance death benefits are exempted from tax* under Section 10(10D) of the Income Tax* Act,1961.
Customisation options: Besides the basic life cover, you can tailor the term plan according to your needs. You can enhance the coverage by adding critical illness cover, disability cover, etc.
Gratuity benefits: Some group insurance plans have the feature of gratuity. So, upon completion of a specific period in the organisation, you may get a gratuity benefit. The period is usually five years.
Coverage for loan liabilities: A group term insurance plan may offer you the advantage of loan liabilities coverage. The loans could be education loans, home loans, car loans, etc. This extra advantage makes you stress-free about your liabilities.
Enhance productivity: With a group term insurance plan, you feel cared for and appreciated by the company. This keeps you motivated and enhances your productivity.
Easy claim settlement: The claim settlement process of a group insurance plan is easier and quicker than an individual term policy. Also, the employer supports your family while initiating the claim against the insurance company.
Peace of mind: A group term insurance plan is hassle-free as the benefit comes without much effort. Also, there is peace of mind about the financial security of loved ones in your absence.
A group term insurance policy is beneficial not only for you but also for your employer. The benefits of term insurance for the employer are:
Low insurance premiums: Usually, group term insurance is provided free of cost to the employees. So, the employer benefits from the low premium costs due to wide coverage under a single premium.
Tax* benefits: The premium for a group term insurance is considered an expense under the Income Tax* Act,1961 and is tax*-deductible. Hence, providing insurance to the employees gives tax* benefits to the employer.
Increased employee morale and productivity: The insurance cover gives security and a sense of appreciation to the employees. This leads to increased morale and productivity of the employees.
A group term insurance has immense benefits for the employee and employer. But it may not be sufficient because it terminates once you leave the organisation. So, buy an individual life insurance policy apart from group insurance. It will ensure your family’s financial protection in your absence even if you no longer work in an organisation.
Tata AIA offers several life insurance plans that give adequate financial cover to your loved ones in case of an eventuality. With the best policy advice, the insurance plans are tailor-made to suit your needs and costs. So, start buying Tata AIA life insurance to secure your family’s financial future and fulfil your dreams.