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Who Can Purchase Group Term Insurance in India?

Living and working as a group has immense professional benefits. It can bring in innovative ideas, cooperative fund management, efficient resource utilisation and swift progress. But, what makes a group feel secure to persevere for long term profits? It is simply the personal satisfaction that the management ensures to provide for the group members. Personal satisfaction is maximum when the group takes enough effort to protect the members' families financial future. And, that is where the group term insurance gains importance. It can provide financial support to the family in case of the unexpected demise of a group member. So, who can purchase a group term plan in India? Let us get ahead and understand them in detail!
 

Before we get started with who can purchase group term insurance, let us understand what it means.
 

What is a Group Term Plan?

It is an insurance product that provides life cover to the members of a group. The group can be a specific society, a group of loan borrowers, or employees. So, the major distinction is the employer-employee group and the non-employer-employee group. The group members can get the pure term, gratuity, superannuation and loan cover benefits apart from life insurance.
 

Who can Purchase Group Term Insurance in India?

  • Group term insurance is available for different sections of people as listed below:
     

    1. Employer-employee groups
    2. Nonemployer-employee groups
    3. Banking institutions
    4. Non-banking financial institutions
    5. Any professional group
    6. Microfinance groups
    7. Members of the same social or cultural group
       

The two broad groups can be classified as the employer-employee group and the non-employer and employee group.

Employer-employee group

The employer-employee group refers to the employees working in an organisation or a business entity. The employer will be the master policyholder responsible for the insurance process. Also, the employer will pay the major proportion of the premium amount. The employer will issue the confirmation of life insurance protection to the employees based on the features of the group insurance policy. The settlement in case of the death claim to the employees will be done through the employer. The cover for individual members can be based on their ranking in the organisation, or there can be a uniform cover for the entire group.


There are a few benefits for the employer and the employee in the case of the group term plan. 
 

  • Employer benefits

    1. Employers can provide employee life cover to assist the families in case of their unexpected demise. It will increase employee satisfaction and further reduce the attrition levels to the maximum extent. Employees start trusting their employers and work more efficiently, creating value for the organisation.
    2. The cost of purchasing a group term plan is less than buying individual life insurance plans for the employees.
    3. Applying for the policy, managing the routine processes and premium payments and making death claims are relatively easier in group insurance plans.
    4. Employers can also accomplish the necessary statutory obligations and receive tax* benefits based on the prevailing laws.
       
  • Employee benefits

    1. Employees can ensure financial protection to the families in case of their unexpected death.
    2. Medical examinations are not required in the case of a group-term plan.
    3. As the risk is spread over a large group, employees get a reasonable cover for a lesser premium rate.
    4. Tax* benefits under Section 80C of the Income Tax Act, 1961 for the employees.
       

Nonemployer-employee group
 


In non-employer-employee groups, the insurer will issue a certificate of insurance to the insured group members. The certificate will include the group life insurance benefits, the policy term, premium to be paid by each member, premium payment frequency and the detailed terms and conditions of the contract. Every individual member will be the insured beneficiary. In addition, there will be a master policyholder who takes responsibility for the policy on behalf of the members. The master policyholder will issue the certificate of insurance to the members of the group. The premium amount can change based on the number of members present in the group during the policy term.

Credit life insurance is a common form of group term insurance plan offered to the non-employer-employee group. For example, the lending institutions protect the money that they lend to the borrowers. Thus, it ensures the burden of outstanding debts is reduced in the hands of the borrowers' families.


Every insurer will have their defined terms and conditions for the group insurance plan. 

Conclusion

Group term insurance plans are designated for the financial security of the families of individual members in a group. Group term insurance can be purchased by the employer-employee group and the non-employer employee group. Some of the prominent groups that can avail of the benefits are banking institutions, professional groups, microfinance institutions and social and cultural groups. There will be a master policyholder responsible for premium payment, insurance process, and the death claim.
 

In addition, every member will have a certificate of insurance for the death claim process. In the employer-employee groups, the group insurance policy for employees will have varied benefits for the employer and the employee. Every insurer will have definite terms for the policy based on the group and the members involved. Analyse the policy and make the best use of the features for maximum benefits and protection for the group members. 
 

L&C/Advt/2023/Feb/0515

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Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA),  Tata AIA Life Insurance  is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

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Disclaimer

  • Insurance cover is available under the product.
  • The products are underwritten by Tata AIA Life Insurance Company Ltd.
  • The plans are not a guaranteed issuance plan, and it will be subject to Company’s underwriting and acceptance.
  • For more details on risk factors, terms and conditions please read the sales brochure carefully before concluding a sale.
  • This blog is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
  • Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.
  • Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.
  • *Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfilment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Tata AIA Life Insurance Company Ltd. does not assume responsibility on tax implications mentioned anywhere in this document. Please consult your own tax consultant to know the tax benefits available to you.