What are the Benefits of Group Term Life Insurance Plan?
Published On Jun 17, 2021
Table of Contents
- What is a Group Term Life Insurance Plan?
- Benefits of Group Term Life Insurance Plan for Employees
- Benefits of Group Term Life Insurance Plan for Employers
- Benefits of Group Term Life Insurance Plan for an Informal Group
Most of the employers provide a group term life insurance as an extensive employee benefits package for their employees' future goals and interests. However, it is not restricted as an employer-employee policy and is available to customers of banks, microfinance institutions, non-banking financial institutions, professional groups and NGOs. Some employers offer it to employee's dependents and spouses as well.
The plan provides financial security to the beneficiary in the event of life assured's demise. You can consider purchasing a group term insurance plan offered by your employee as the cost is lower than regular individual term insurance plans. Read on to find more about group term life insurance.
What is a Group Term Life Insurance Plan?
A group term insurance plan is an insurance solution for corporations. Under it, eligible employees, such as permanent employees, usually get the average coverage equal to a certain percentage of their annual salary by their employer. In addition to this, benefits like a uniform cover to everyone, ranked covers according to the employee's position, loan covers and disability and critical illness benefits are provided.
Like standard term insurance policy, the death benefit is provided to the beneficiary if the life assured passes away within the policy term's end.
Benefits of Group Term Life Insurance Plan for Employees
Here are some benefits of purchasing a group term life insurance plan.
Automatic Insurance Cover
You can avail the insurance cover by merely being a part of the group. It ensures basic insurance cover services to members who do not have a personal life insurance policy plan.
Customized According to Staff Requirements
A repatriation grant, education allowance and accidental death and more benefits can be added to the basic coverage based on personal needs of individual life assured under group term life insurance policy.
The premium is much lower than individual term policies as many people are provided insurance coverage under one plan.
Tax benefits are offered to both the employers and employees under the group term life insurance plan. Under Section 10(10D) of the Income Tax Act, death benefits are exempted from tax payments.
No Medical Examination
You can purchase the group term life insurance plan without a prior medical examination as opposed to many standard term insurance policies.
Benefits of Group Term Life Insurance Plan for Employers
Group term life insurance plans are equally helpful to employees and their employers. Some benefits of a group term life insurance plan for employers are given below.
- The employers can get life insurance as well as free benefits through some plans.
- The higher profits and reduced costs on better-performing investments are enjoyed by the employer.
- As the strategic management of a group is less costly, the group term life insurance plan acts as a pretty economical option.
- Employers can invest their funds in a group term life insurance plan and enjoy refunds based on the performance of their fund.
Benefits of Group Term Life Insurance Plan for an Informal Group
The benefits of a group term life insurance plan for an informal group can be learned from the following points.
Payment of Other Member’s Premium
As the premium rates are pretty low, you can offer to provide premium payments on life cover of a fellow life assured to enjoy tax benefits under the Income Tax Act.
Benefits During an Accident
The life cover benefit is offered at a lower cost under the group term life insurance plans. Thus, if the life assured dies due to an accident, the nominee will receive the death benefit which can provide financial protection against loans and debts.
A group term life insurance plan is an excellent plan to purchase if you do not have the budget to get an individual term insurance policy. It is advisable to carefully examine all the benefits, terms and conditions of the group term life insurance plan provided by your employer before investing.
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.