A Group Term Life Insurance refers to an insurance plan which includes a group of people for a specific duration for a fixed rate of premium payment. It includes life coverage for a group of people, which comprises paying compensation to the family members of a group in the event of death during the policy tenure. The compensation will be paid to the family members as a monthly or lump sum death payout. It is an easy-to-avail benefit that provides financial protection for the family.
Features of Group Term Life Insurance
- Death Payout
It provides the total guaranteed amount to the nominees chosen by the desired individual.
- Employee Cover by Default
This perk comes automatically with the plan for the employees.
- Premium Payment
The employer will pay the premium amount, but in some cases, employees will also be responsible for paying the premium.
- Seasoned Fund Managers
The professional fund managers manage the funds accrued, superannuation, gratuity, or any other payouts, on behalf of the employer.
- Gratuity Benefit
The employees can avail themselves of gratuity benefits once a certain number of years, as specified, have been served.
- Premium
The premium is directly proportional to the number of group members.
- Affordable
They are less costly.
- Coverage
The amount covered will depend on the designation of the individual in the organisation.
- Tenure
It has a year’s limit, after which the policy is to be renewed.
- Portability
It ends with the change in the job of an individual as it is linked with their work.
Benefits of Group Term Life Insurance
Following are some of the key benefits of Group Term Life Insurance in India:
- Default Insurance Cover
The members of a group or community are covered by becoming part of the group, providing basic coverage to all group members, irrespective of whether they have personal life insurance or not.
- Gratuity Funding
It makes it easier for the employees and offers life insurance coverage to the workers.
- Tax Benefits
The death benefits are tax-free according to the Sec 10(10D) of the Income Tax Act, 1961.
- Customisable to Suit Employee Needs
It can be customised as required, such as tuition premiums, accidental death, repatriation allowance, etc., to provide the best benefits to employees in addition to the present one.
- No Medical Check-Ups
Medical examinations are not required before enrolling.
- Budget Friendly
The premium is quite lower than that of individual plans as it includes many individuals.
Eligibility
- Employee-Employer
- Banks
- NBFCs
- Non-Employer-Employees
- Specialist Groups
- Microfinance institutions
- The size may differ from one policy to the other.
- The minimum age required is 18 years.
- The maximum age ranges from 65 to 69 years.
Conclusion
A Group term life Insurance Policy has many benefits, which can only be availed to complement individual insurance plans with extensive coverage. As an insurance provider and employee analyses the terms and conditions of the community life insurance, an employee may be required to pay additional money to convert to an individual policy. Also, these plans do not come with any maturity or survival benefit.