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Can I Buy a Term Plan Through My Employer?

31/10/2022 |

Life insurance is one of the financial products that can secure your family's financial future. Not only can you benefit from life insurance by directly buying a term plan, but also through a group term insurance plan purchased by your employer. Employers across the nation consider it their financial responsibility to ensure such protection for their employees.
 

In addition to the above, group term plans have several unique benefits for the employer and the employee alike, which may strengthen the bond between the two. Therefore, insurance providers have introduced group term insurance plans.
 

Therefore, you can buy a term plan through your employer if they have decided to provide such a benefit as part of their company policy. However, it is important to understand the terms and conditions of the policy before availing of the benefit. Here are some important details about group term insurance and its features.
 

What is Group Term Insurance?
 

A group term plan is a life insurance product that serves as a master contract between your employer and the selected insurance provider. It can cover a large group of employees under one contract. Therefore, the employer becomes the policyholder and you are a beneficiary through them.
 

In case of your unexpected demise, the insurer will provide the death benefit to your family. Insurers have recognised the importance of such financial products and introduced different benefits for the policyholders. For instance, the Tata AIA life insurance group insurance plans provide pure term cover, gratuity, superannuation, and loan benefits apart from other key policy inclusions.
 

How Does Group Term Insurance Work?
 

Group term insurance is a comprehensive term life insurance plan in which your employer buys the insurance plan and pays for the premium to a large extent. It is a part of the employee benefits provided by the company. So you, as an employee, get insured as part of the comprehensive coverage offered by the policy whilst paying a fraction of the premium, which gets decided by the employer.
 

However, the master contract, which is the actual insurance policy, is issued to your employer. It is worth noting that you will receive a certificate of insurance as proof of the insurance contract to avail of the benefit later in life when required by your family.
 

How Can You Benefit from Buying a Term Plan Through Your Employer?

 



As an employee, you receive different benefits from a group term plan, in case you have opted for it.
 

  1. Life insurance at a lesser cost:

    The cost of group term insurance coverage is less than what you will have to pay for an individual term plan because the coverage includes a large group of people. Therefore, you can take the employer insurance benefit if you have not purchased a term insurance plan or if the latter's coverage is Inadequate. A group term plan can provide coverage to your family as well.

  2. Life insurance for your family:

    While your employer charges a significant fraction of the insurance cost from you, you get the benefit of securing your family with considerable financial support in your absence.

  3. Easy mode of payment:

    Your employer handles the monthly premium payment and the renewal for a group term plan. The proportion of the amount you need to pay gets deducted from your salary and, therefore, there is no possibility of a policy lapse.

  4. No need for mandatory health check-ups:

    Insurers generally prefer a basic medical check-up report to decide the premium while issuing a life insurance plan. However, this medical test will not be required in a group insurance plan due to its broad coverage. So, suppose you are suffering from a disease that involves significant risk of death, you can benefit from a group term life insurance plan and get substantial financial protection for your family.

  5. Enjoy a simple and hassle-free procedure:

    By opting for a group term insurance plan, you get the benefits of an insurance plan with a very simple application process. The claim processing and settlement procedure are also extremely swift.
     

These are some of the most prominent benefits you can expect from opting for a group insurance plan provided by your employer.
 

Why Do Employers Provide Employee Insurance Policy?
 

Employers decide to provide a group insurance plan for the benefit of the employees. However, they also get some advantages from this approach. It ensures several monetary and non-monetary benefits to an employer. Here is a brief description of the benefits of a group term plan for an employer.
 

  1. More employee engagement and lesser attrition:

    Employers always seek a long-term employee engagement with the organisation. It helps them improve their business and profitability to a great extent. A group term plan can help the employees feel that the organisation is also interested in the well-being of the employees and their families, thereby potentially reducing attrition.

  2. High employee productivity:

    When an organisation considers such financial assistance for the employees, it will increase their quality of work, ensuring high productivity.

  3. Compliance with statutory obligations:

    Employers can easily meet the necessary statutory obligations by purchasing group term insurance with the premium payment being considered a business expense.

  4. Tax* benefits:

    Employers can avail of tax* deductions for the premium paid towards a group term insurance plan under Section 37(1) of The Income Tax Act, 1961.
     
Conclusion
 

The employer-employee relationship is certainly an important aspect of the growth of any business. Therefore, employers take different approaches to ensure this relationship stays strong, including the provision of various employee benefits. One of the significant contributions in this regard is a group term insurance plan.
 

The employer purchases a comprehensive life insurance plan from an insurer to ensure a life cover for their employees and financial security for the employees' families. In addition to this, group insurance plans in India offer a range of additional benefits for both the employer and the employees. Therefore, if your employer offers you an option to participate in a group term, you should consider accepting it.
 

On the whole, stay insured, protect your family, and engage better with your organisation for collective growth!
 

L&C/Advt/2022/Oct/2646

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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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Disclaimers

  • Insurance cover is available under the product.
  • The products are underwritten by Tata AIA Life Insurance Company Ltd.
  • The plans are not guaranteed issuance plans, and they 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.