Group Term Insurance Plan: Here’s Everything You Need to Know

Group Term Insurance Plan: Here’s everything you need to Know

Group term life insurance plan is the type of insurance coverage provided to a group of people. It is offered to a group either by an employer, association or another organization. In the event of death, it provides financial assistance to the family of the concerned employee. Besides, it is less expensive than other policy coverage's.

Features of group term insurance plan:

Group term insurance plan has so many attractive features that make it ideal for employees. Below mentioned are the few features of a group plan:

1- Members can be easily added at any point of time in a year.
2- They are relatively cheaper than other policy covers.
3- Application process for group term insurance plan is quite easy and quick.
4- The minimum size of a group includes 50 members.
5- You get add on covers as riders that insure you for disabilities, critical illness, and critical illnesses. 
6- Moreover, in the event of death, a pre-decided sum assured is paid to the beneficiaries of the insured person.
7- Also, employees can enjoy the advantages they are entitled to, while keeping a strong connect with the employers.

Eligibility for group term life insurance policy:

Group insurance policy is offered to the following section of people:

1- Employee groups.
2- Non-employee groups.
3- Professional groups.
4- Banks.
5- Micro-finance Institutions.
6- Non-banking financial institutions.

Here are the benefits of group insurance schemes to the employers:

1- Group insurance policies in India are more economical, because they cost less while administering scheme on group basis.
2- There are few plans that offer both life insurance cover along with gratuity benefits to the employers.
3- Under the group insurance policy, employers are aided in funding their gratuity liability with ease. Also, gratuity funds are strategically built in order to fulfill subsequent gratuity payments, which therefore, reduce the burden on employer.

Advantages of group insurance plan to the employees:

1- In any unfortunate event, such as an employee’s demise, critical illness, etc., employees as well as their families are guaranteed of financial assistance.
2- Premium paid by the employees is not regarded as perquisites.
3- It can be customized to reduce the need of employees that have been enrolled.
4- It offers security to the family of the insured person.
5- Besides, it provides death benefits to the employees that are exempt from tax under section 10(10D).
6- It safeguards the financial interest of the insured person.

How does a group insurance plan works?

Here is the flowchart that explains how such employee benefit plan works:

1- An administrator of a group is issued a master policy on which he pays a premium.
2- For a tenure of one year, this initial payment covers every member of the group.
3- Thereafter, all the group members are provided with an option to choose the sum assured. This sum can be linked to a loan account or salary account.
4- Also, all the members are covered for a tenure of one year from the date of commencement of the plan, once the policy holder has paid the premium.