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Group Term Insurance


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Group Term Insurance

Want to pick an insurance policy for your employees? How about group-term life insurance?
To ensure the complete protection of your employees, getting group term insurance is the best choice. This insurance plan offers a lump sum payment to the employee’s beneficiary in case of death for employees to cover death and protect the family. Here’s a complete guide to getting a better understanding of its basics, eligibility, and benefits before getting started.

What Does Group Term Insurance Mean?

A group term insurance plan is life insurance that covers a group of people for a specified term or period in exchange for a fixed amount of premium payment. The group term insurance will offer life coverage to a group of people, and the group member’s family will get compensation if he/she dies during the policy term. The compensation amount is paid as a lump sum death payout or a monthly payout. Group-term insurance is mostly purchased by organizations for their employees. It is like an incentive for the employees, where the employer becomes the policyholder and the employee becomes the beneficiary.

Types of Group Term Life Insurance

Here are different types of group term life insurance plans:

Employee-Sponsored Group Term Life Insurance

Group Health
Basic Group Term Life Insurance

Group health insurance gives coverage to a group of employees, especially for medical expenses. It provides up to a specified insured amount. This insurance is taken out by the employer and also covers the employees’ family members.

Group Term
Supplemental Group Term Life Insurance

It is additional coverage that an employee can purchase on top of their basic insurance policy. It’s the employee’s responsibility to pay the premium for this coverage.

Group Travel
Group Travel

Group travel insurance is a type of insurance policy that covers any loss or damage caused while traveling. An employer can protect a group of employees from unexpected scenarios like loss of baggage, documents, or a flight delay.

Non-Employer Sponsored Group Term Life Insurance

Association Group Term Life Insurance
Association Group Term Life Insurance

It is coverage that is offered through an association or organization. The members of the group can purchase the coverage at a discounted rate.

Affinity Group Term Life Insurance
Affinity Group Term Life Insurance

It is very similar to association group insurance but is generally offered to a specific affinity group, such as the credit union or the alumni association.

Group Travel

Lenders offer this type of insurance to their borrowers. The policy pays off the borrower’s debt if they pass away before repaying the full amount.

Wholesale Group Term Life Insurance
Wholesale Group Term Life Insurance

As the name implies, this policy is for a corporation or a labor union, but at a discounted rate. The group then divides the coverage among its members.

Features of Group Term Insurance

The various features of group term life insurance are as mentioned below:

  • Death Payout : If one of the members of the group term insurance dies within the term period, the beneficiary of the insured will receive the total amount.

  • Premium Payment : It can vary from group to group. In some cases, the employer pays the premium, and sometimes the employee has to pay the premium from their salary.

  • Seasoned Fund Managers : The fund managers in a company manage the fund according to their extensive knowledge of the market.

  • Gratuity Benefits : Many of these policies on the market also offer gratuity payments to company employees

  • Credit Protection : Banks also give options to choose from a group credit protection plan to protect themselves from unforeseen financial losses.

  • Master Contract : It can vary from group to group. In some cases, the employer pays the premium, and sometimes the employee has to pay the premium from their salary.

  • Premium Payment : It can vary from group to group. In some cases, the employer pays the premium, and sometimes the employee has to pay the premium from their salary.

Benefits Offered Under Group Term Life Insurance

Benefits to the Employer

  • Life cover for all the group members under one policy

  • Easy and stress-free financial help to the employee’s family. 

  • An economical way to obtain high coverage at a lower premium

  • GTI covers the future service gratuity liability

  • Serves as a strong retention tool.  

  • The premium paid by the employer will be tax deductible.

Benefits to the Employee

  • Giving financial assistance to your loved ones against accident, illness, or untimely death.

  • Ease of no medical tests until free coverage limits.

  • A cover for housing or vehicle loan given by the employer to the employee.

  • Premiums will be paid by the employer and will not be treated as a prerequisite.

  • There will be death benefits exempt from tax.

How Does Group Term Life Insurance Work?

The term insurance plan is ideal for employers who run an organization or group that wishes to financially secure their families. Here are the steps to get group term insurance:

  • Do policy research. One of the critical decisions to make while picking an insurance policy is the sum assured to be paid. Here, the sum assured is the amount that an employee’s dependent will get if they pass away during the policy term.

  • Add your riders. Riders are the add-ins that make your group term cover comprehensive, like illness cover, accidental benefits, and more. Choosing the riders will increase the premium on the cover. 

  • Get a quote from the insurance-providing company. Once you have the basic policy details, the insurer will provide you with a premium estimate depending on the type of industry you serve, the number of employees, and their average age.

  • Roll out the policy. Now you can let your employees list their beneficiaries in the policy. If an employee passes away during the term period, the group term policy will release the sum assured cover.

To Sum Up!

The group term life insurance will be a long-term insurance policy to secure the employee’s dependents if they pass away. Nobody can ever be in a situation where they are uncertain about how their lives will play out. 

As an employer, you can guarantee that your employee’s dependents won’t suffer in the foreseeable future. And for this, group term insurance is the best policy. 
This way, you can show your employees that you are there for them beyond work and encourage them to think guardedly about the future. 
If you are interested, schedule a call with our experts, and we will help you get the best group term policy as per your requirements.

Frequently Asked Questions

Sum assured is a death benefit in group life insurance. A death benefit is a lump sum payment made to employees upon their death. It is the sum payout that the employee’s family will receive under the group life cover scheme

No, individuals are not eligible to buy group term insurance policies. To get such a plan, you have to be a part of the group.

Yes, the minimum sum assured under a group term life insurance coverage scheme ranges between Rs. 1000 to Rs. 5000. However, this sum can vary across different plans, employee grades, and insurance groups.

The minimum number of employer-employee (formal groups) required to apply for group term insurance is 10 members.

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