Group Term Cover: Together you're stronger

What is group term life insurance plan? 

As the name suggests, group term life insurance is a term plan that provides life cover to a group of individuals for a specific number of years, for a fixed premium.  

A group term insurance plan is usually purchased by companies as it is more affordable than individual plans. If any of the group member passes away during the policy term, the life cover is paid to their dependents as a lumpsum or in instalments. 

How group term life insurance policy works? 

The most common example is employer-employee group term insurance, in which the employer is the master policyholder. The employer has a choice of opting between two group term life insurance policy covers: 

Flat Cover, in which all employees get the same cover. 

Graded cover, in which the life cover is as per the corporate hierarchy. 

Generally, the employer pays the entire premium amount. The premium is calculated basis the size of the group, average age of the employees, and other factors. Group term life insurance is valid for one year and must be renewed annually for the benefits to continue. 

Eligibility Criteria to buy a group term insurance 

Group term life insurance policy can be bought by:

• Employer-employee groups. 

• Non-employer- employee groups. 

You need minimum 10 members to apply for the group term life insurance in case of an employer-employee group and minimum 50 members for an informal group (non-employer- employee). 

Each group may have different eligibility criteria. There is no limit on size.  

Benefits of group term life insurance  

Group insurance is ideal for both employers and employees. Some of group term life insurance benefits include:  

• Assured protection: For some people, especially youngsters, insurance is the last thing on their mind. Group term insurance ensures that their family is financially covered in case of any misfortune. 

• Lower premiums: As it is usually purchased by companies it is more affordable than individual plans  

• Customisation: Benefiting from your employer, they may offer you the opportunity to enhance your coverage as your circumstances evolve, with the option of paying an extra premium. 

• Rider benefits: If your employer provides you with the option, you can purchase additional riders for protection against future risks such as critical/terminal illness, accidental death, and total permanent/partial disability. 

• Tax benefits: Tax benefits may be available on premiums paid and benefits receivable as per prevailing Income Tax Laws. These are subject to change from time to time as per the Government Tax laws. Please consult your tax consultant before purchasing this policy. 

Although employer-provided insurance might offer sufficient coverage, supplementing it with a personal policy allows for increased coverage, providing a safety net in case of unexpected events and ensuring continuous protection against potential risks. Remember, your group policy terminates when you leave the organisation and that could leave you unprotected. With a personal plan, you get a choice of more options that can be customised to your needs. Whichever one you choose to go with, insurance is unarguably a necessity.