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Group Term Life Insurance Plan

The insurance coverage offered to a group of people is referred to as a group term life insurance policy. In the event of the death of an employee, group term life insurance schemes provide financial independence to the family of the employee. Its purpose is to provide a monetary guarantee to the beneficiary of a group term life insurance policyholder in the case of the death of the insured.

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1. Premium has been calculated for coverage till 60 years
2. Eligibility depends on income, occupation and educational qualification

What Is A Group Term Life Insurance Plan?

As the name implies, Group Term Life Insurance Plans are meant to provide life insurance to a group of people under a single policy. A group insurance policy is not limited to employer-employee groups, but also includes bank customers, NGOs, professional organisations, non-banking financial institutions, and microfinance institutions.
In the event of the death of the employee, a group insurance policy for employees provides financial help and independence to the beneficiaries of an employee. Some group insurance plans cover outstanding loans for a group of borrowers, and others include critical illness and disability insurance.
A group insurance plan, on the other hand, is not limited to employer-employee groups; it also includes bank clients, non-governmental organisations, professional organisations, non-banking financial institutions, and microfinance institutions.

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Features Of Group Life Insurance Plans

The following are some of the features of Group Life Insurance Plans-

1. Contract Master

The group life insurance policy is a type of insurance that is routinely issued to employees, regardless of whether they have insurance or not. It is a master contract in which an organisation buys a master policy whose premium is determined by the number of members and the sum assured amount chosen by the company.

2. Contributory and Non-Contributory

There are two types of group life insurance: contributory and non-contributory. The employee contributes to the policy by paying a part of the premium, while the employer covers the rest. The premium is fully paid by the employer in the latter instance.

3. Affordable

Individual life insurance is more expensive than group life insurance.This is due to the fact that the insurance company can combine various expenses like administration, operation, and renewal into a single master policy.

4. Tenure

The policy usually has a one-year expiry date. The policy must then be renewed every year after that.

5. Payout for death

In the unfortunate event that an employee dies in an accident, the group life insurance pays the complete guaranteed sum to the nominee selected by the injured individual.

Benefits Of Group Life Insurance Plans

Employers cover all of their employees under a group life insurance plan, regardless of age, profession, or social background. The following are some of the benefits of the policy:

1. Term Policy

In the unfortunate event that an employee dies in an accident, the group life insurance pays the sum assured amount to the nominee named by the deceased individual.

2. Premium Payment

In some situations, the premium of the group life insurance is paid by the employer. In any case, the employee is responsible for the premium, which is deducted straight from his or her pay.

3. Employees are Fully Protected

The health insurance is a benefit that comes with the employee benefits package. Once you have been approved into a company, you are automatically enrolled in the plan. Some companies allow you to purchase an additional individual plan in addition to the group policy, enabling the individual policy to continue to operate even if you leave the company.

4. Cost-Effective

The premium of a group plan is much lower than individual policies because it covers a large number of people. A group insurance policy, without a doubt, is a better way to obtain insurance protection against a range of risk factors, let alone life. Start by deciding the best group plan.

5. Tax Benefits

Employers and employees both profit from group term life insurance plans. Death benefits are tax-free under current tax laws, according to Section 10(10D) of the Income Tax Act of 1961. Therefore, group insurance plans are effective in both employee welfare and retention.

How Does It Work?

A group administrator must pay an initial premium to get a master policy under a group term life insurance policy. This one-time payment covers all participants in the group for one year. Members of the group can choose the amount of the sum assured. This amount could be paid as a one-time payment or linked to a salary or loan payment. The group members are covered for a year from the starting date of the policy after the policyholder pays the fee.

Who Can Buy A Group Term Life Insurance Policy?

The following groups of people are eligible for group term life insurance policies: -
Groups of employers and employees

  • Employee-non-employer groups
  • Banks
  • Financial institutions that are not banks
  • Institutions that provide microfinance

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