How Important is it to have a Group Insurance Policy?

At the heart of every organisation are its employees. For any business to perform at its absolute best, its employees must feel valued and happy. Happy employees are productive, and productivity, like the cliché goes, is excellent for business. From team bonding sessions and reward ceremonies to periodic performance appraisals and leave encashment options, companies utilise multiple tools for retaining their employees and fostering a sense of loyalty amongst them.

An employee's happiness within an organisation depends on several factors, including timely career growth, leadership opportunities, and financial security. A group insurance policy helps further an employee's financial security goals.

A group life insurance policy gives the group members the peace of mind that comes with knowing that their families will be financially secure even in their absence. A group health insurance scheme typically extends to include the spouse, dependent children, and parents of individual group members covered in the policy.

Irrespective of the age, socio-economic condition, position, or gender, group insurance plans offer standardised coverage and benefits to every group member enrolled in the plan. Employers can choose between many group plans to cover their employees' specific insurance needs at scale.

Who can be covered under a group insurance policy?

Primarily, there are two different types of groups covered under any group insurance scheme.

Employers-Employees

Also known as formal groups, such groups consist of all the members working in a specific company or corporate entity, under one owner or manager. The group manager serves as the policyholder and purchases the group insurance policy. The policy's coverage is extended to include all the members of the organisation who become the beneficiaries of the policy benefits.

Offering a group insurance policy as a service benefit is a smart way to answer the 'what's in it for me?' question that every employee has. Especially in today's uncertain times, an insurance policy that covers one's health concerns and ensures one's family's financial security is an attractive tool for top talent hiring and retention.

Non-employers-Employees

For the purpose of availing the benefits of group insurance plans, a non-employers-employees group consists of members of the same social organisation or cultural association, and clients holding credit cards or bank accounts at the same provider. Here, the group administrator serves as the policyholder and purchases the group insurance plan while the group members enjoy the coverage offered.

Group insurance plans offer standardised coverage to all members of the organisation or group under a single policy. Insurers cover groups of all sizes, and an individual's cover ends only when they leave the group. Even in this case, they might be able to port the policy from group insurance to individual insurance plans and continue their coverage.

How does a group insurance policy work?

Group insurance plans fulfil specific objectives, which makes these plans such a sought-after addition to company policy.

Offering your employees' term insurance

In the case of an employee's untimely death during the tenure with the company, a group term plan coverage ensures that the sum assured listed in the policy is paid to the family members of the deceased employee. Term plans are known for being essential and inexpensive. With a group policy, the expenses are reduced even further. In cases where the group term plan is being offered to the employees at the employer's cost, the members pay nothing for life coverage while they are still employed at the organisation.

Covering your employee's liabilities

The pay-out from a group life insurance policy can easily be used to fulfil any loan liabilities or outstanding dues towards cards or loans that the participating employee had incurred in his/her lifetime. Instead of passing the burden of paying off these liabilities to grieving family members, group life insurance coverage can be used to cover an employee's unpaid liabilities.

Creating a gratuity corpus

An employee becomes eligible for gratuity after finishing five years of service in an organisation, as per relevant laws. For an employer, gratuity and leave encashment are future liabilities that need to be paid to their employees. By investing this gratuity amount in the right group insurance and investment options, the company can help create a gratuity corpus to aid in the employee's financial growth.

Why do organisations choose group insurance plans?

Choosing a group insurance scheme is beneficial for both employers and employees. The employees enjoy customised insurance plans with affordable or no premium payments. At the same time, the employer can look forward to attracting and retaining top talent in the industry along with the hassle-free implementation of the group insurance plans.

Let's look at a few reasons why organisations opt for such plans:

Convenient and easy to process

At the management level, the last thing you need is more paper-pushing. Purchasing separate coverage for every individual in your organisation means tons of paperwork and inefficient use of your business funds. A group life insurance plan offers term coverage to all your employees in one fell swoop, and that too, at scale.
Group insurance plans are designed with the needs of the organisation and its members in mind. The multitude of individual policies is processed under one group policy, making the whole process straightforward and quick from issuance to renewal.

Cost-effective

A group insurance policy covers groups of all sizes. Since the risk is spread out over a large number of people, the insurer can afford to offer the organisation very low premium rates. Similar to when you buy products in bulk, a group policy covering large numbers, features attractive rates.

Easy payment options

Typically, group insurance schemes are renewed yearly. You can also add new members to the policy at this time, depending on the plan you have chosen. This flexibility also extends to the premium payment options. You can choose to make premium payments monthly, quarterly, or yearly as per your convenience.

Boosting employee satisfaction

A group insurance policy serves to protect your employees' interests. It offers them financial security, and more importantly, a comprehensive policy with benefits shows your employees that you genuinely care. It shows them that not only are you concerned about what will get your employees to work every day, but you care about what keeps them up at night. Since these worries are off their plate, employees are more likely to feel motivated and experience greater satisfaction working for you.

Expert fund management

The insurance provider assigns an efficient fund manager or team to handle the funds collected for the group insurance plans. This fund manager expertly balances the funds to ensure that the employer has access to sufficient amounts during emergencies. Not only does the insurer handle investments of the accumulated corpus, but it also ensures that pay-outs like superannuation and gratuity are made seamlessly from the existing cash flow.

Insurance obligations and tax benefits

Your organisation has certain statutory obligations to meet. Group insurance plans help you meet these obligations. Furthermore, the premiums paid towards maintaining a group insurance policy for employees can be claimed as tax exemptions under Section 37 of the IT Act of 1961. This is an added advantage as you save money while buying a volume policy and get exemptions on business expenditure while filing taxes.

Seamless claim settlement

One of the many benefits of choosing a group life insurance plan is that a large group is assigned a dedicated claim settlement team. For an organisation, having a dedicated team means fewer limits, seamless claiming, and faster processing of requests.

What do group insurance plans offer to employees?

The benefits enjoyed by employees depend on the specifics of the group insurance plans chosen by the organisation. If employees feel the need for more comprehensive coverage, they can always choose to add an individual plan to their financial portfolio.

Benefits of group term insurance plans

1. Employees who do not have personal life insurance get a default cover because the whole group is covered.

2. If the employer has paid the policy premium, the employee cannot claim the premium amount in their tax deductions. However, the death benefits associated with the policy are exempt under Section 10(10D) of the IT Act of 1961.

3. In addition to the base cover, employers can choose to customise the group policy with riders and add-ons covering accidental death, critical illness diagnosis, or education allowance for the employee's benefit.

4. Life insurance plans with an investment component help the organisation meet its future gratuity liabilities with ease. This investment translates to a more substantial gratuity corpus for the employee.

5. In most cases, the employer offers group insurance as a service benefit, and the costs are not transferred to the employees at all. In effect, group members get default insurance cover at no charge as long as they are a part of the group.

Benefits of group health insurance plans

1. In today's uncertain times, health concerns are on everyone's priority list. The default cover offered by group health insurance may not be as much as a personal Mediclaim policy, but it is still a valuable addition to your lifecare portfolio.

2. The employee could rest assured that they will have access to institutional support if they were to make a health claim against the policy.

3. Most group health insurance policies offer maternity coverage from the day of enrolment. There is also no waiting period to contend with as all health issues, including conditions like diabetes and heart problems, are covered from day one.

4. Group health and life insurance policies do not have a mandatory pre-entry medical check-up stipulation.

5. Most group health plans also extend to cover an employee's immediate family members (spouse, dependent children, parents) and their healthcare needs through a floater or additional premium.

6. Additional riders expand existing coverage to include critical illness diagnosis, accidental insurance, dental treatments, reimbursement of costs towards ambulance use, cost of medically-required spectacles, etc.

7. Depending on the organisational policy, an employee may be allowed to port their group insurance plan into an individual policy if they are divesting from the group. A conversion fee is levied, and the employee does not lose coverage.

Meet all your group insurance policy needs with IndiaFirst Life

In today's uncertain times, group insurance policies are the need of the hour. Not only does a group policy protect an employee during a health crisis, but it also ensures the financial security of their loved ones in case of unforeseen circumstances. Purchasing a group insurance policy is an effective and essential step towards ensuring your employees' happiness and safety.

At IndiaFirst Life Insurance, the group insurance plans on offer include pure protection term plans, credit and funded plans, group gratuity voluntary funding plans, life insurance, and comprehensive health insurance plans. Our solutions for groups are designed to protect and cover your employees and provide sustainable post-retirement growth through gratuity and pension plans.

When you buy group insurance plans from IndiaFirst Life, you are offered several flexible and customisable options. Our top group insurance plans include:
1. Protection plans such as IndiaFirst Group Term Plan, IndiaFirst Life Group Credit Life Plus Plan, IndiaFirst Life Group Hospicare Plan, IndiaFirst Life Group Loan Protect Plan, and IndiaFirst Life Group Living Benefits Plan

2. Employee retirement and growth solutions such as IndiaFirst Group Superannuation Plan, IndiaFirst New Corporate Benefit Plan, IndiaFirst Life Employee Benefit Plan, IndiaFirst Life Employee Pension Plan, IndiaFirst Life Employee Welfare Plan and IndiaFirst Life Guaranteed Annuity Plan.

All IndiaFirst Life group insurance plans are flexible and customisable to suit the specific needs of your organisation and employees. Compare the relevant insurance plans to understand which ones will serve your purpose better, help mitigate risks as much as possible, and offer better protection to your employees.