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Who Can Purchase Group Term Insurance In India?

Updated On Aug 05, 2021

Group insurance policies have shown to be an excellent approach to provide financial security to people who engage in similar activities. Most businesses provide their employees with group term life insurance, which guarantees the financial security of an employee's family even after he/she passes away. Its purpose is to offer monetary benefits to the plan's specified beneficiary in the case of the life assured's death. In large firms, it also serves as a tool for staff retention. Let's dive into the article to know more about group insurance plans. 

What are the Features of a Group Term Insurance Plan?

Here are some features of a group term life insurance plan.

  • Coverage

    The coverage provided by a group term life insurance plan varies greatly depending on the employer. The level of coverage depends on one's position in the organisational structure, with benefits for the upper management ranks being significantly higher than those for the lowest levels. Some small and medium-sized businesses, on the other hand, provide balanced, uniform coverage to all of their employees.
  • Premium

    The employer makes premium contributions either entirely or is paid in parts by the employee from his wage throughout his employment. The good news is that when obtained at a young age, group term plans are inexpensive. The group term plan covers all eligible employees by default, and premiums are calculated based on that group of employees, regardless of their health.
  • Tenure 

    Generally, the policy period is one year. After that, the policy must be renewed every year.
  • Age Range 

    The lowest age to enter is 18 years old, while the maximum age spans from 65 to 69 years old.
  • Tax Benefits 

    Section 10 (10D) of the Income Tax Act 1961 exempts death benefit payments to legal beneficiaries from taxation.

Who Can Purchase Group Term Insurance In India?

Employer-employee groups are not the only ones who can benefit from this arrangement, despite common assumptions. A group term life insurance policy is available to any group of people who share similar interests and risks. It is open to various working-class organisations, including employee-employer groups, professional groups, non-employer-employee groups, banks, non-banking financial institutions and microfinance organisations. The term insurance eligibility standards differ for each of these groups, although all are subject to basic insurability requirements. While some plans provide basic and uniform coverage to all plan members, others offer supplemental and graded coverage based on the professional ranking or position of the plan's members.

Why Should You Purchase a Group Term Insurance Plan?

A group term life insurance plan provides value to the employees or the group members and ensures their family's financial survival even after death. Moreover, a good group term insurance plan helps build the image of a caring, friendly and healthy enterprise or group. This way, the enterprise can also enjoy social support for the cause or the business.

Endnotes

Since term insurance eligibility for group plans is based on various characteristics such as a member's age and professional ranking, it's best to choose a group plan that offers a variety of coverage options rather than a conventional single cover. 

Also read 

Term Insurance Riders and How They Benefit You

Top 5 Riders To Add To A Term Insurance Plan

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.        

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