Employee Sponsored Group Insurance Plans
Updated On Sep 07, 2022
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A form of insurance policy known as group insurance includes a number of individuals under one agreement. No matter their age, gender, profession, or financial situation, all group members of such a plan receive the same amount of insurance coverage.
Group insurance does away with the requirement to purchase individual insurance for each member. Group insurance is frequently provided by businesses to their staff as part of the compensation package. Members of the group, their wives, children, and parents who are dependent on them are covered under such a plan.
What Is a Group Life Insurance Plan?
A group of individuals is covered by an insurance plan known as "group insurance," often workers of a company or association members. According to the policy statement provided to the workplace or an association, the insurance benefits are as specified. Health insurance, life insurance, and other types of personal insurance can all be included in the group insurance plan.
Types Of Groups For Whom Group Insurance Plan Can Be Provided
Following groups can avail the benefits of an group term plan -
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Formal Group
All members of a formal group, often known as an employer-employee group, are employed by the same company or business owner. A formal group could be a corporation, commercial organisation, or professional association. The employer purchases the insurance policy.
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Informal Group
An informal group's participants may be part of a society or a community organisation. They can have the same account or credit card. In this kind of group, the administrator or owner of the group obtains the insurance in the name of the group's participants.
Classification Of Group Insurance Plans
As previously indicated, India offers a variety of group insurance products, from life insurance to health insurance. However, non-contributory and contribution-based group insurance plans can be roughly divided into these two categories. The details of both kinds of group insurance policies are provided below.
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Contributory
As the term suggests, this kind of group insurance policy entails the payment of the premium (either entirely or in part) by the members of the group in order to enjoy the advantages of the insurance coverage. For instance, some businesses may take from an employee's pay a specified proportion of the insurance premium.
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Non-Contributary
The group members or workers in this sort of group insurance policy do not need to pay the premium in order to receive the benefits of the policy. A non-contributory group coverage, for instance, is one in which the employer covers the cost of the employee's insurance coverage.
Why Purchase A Complete Employee Benefits Plan?
Following are some of the key benefits emphasising why you should consider purchasing a term plan -
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Cheap Premium And Uniform Coverage
The premium for group insurance is less than the rate for a member's individual coverage. These programmes lessen the insurance company's responsibility because the risk is shared among all group participants. Group insurance offers uniform coverage to all participants. It aids persons with lower income levels in receiving the same level of coverage as individuals with higher income levels.
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Loyalty
Employer-employee loyalty is improved through group insurance. A group member who feels appreciated as a member of the group is more likely to stay associated with the organisation for a long time. Additionally, these programmes assist companies in developing an environment that is welcoming to employees and productive.
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Other Benefits
Families of group members are frequently covered under group insurance plans.
When completing their income tax returns, group members can seek tax advantages on the group insurance premium they paid. Tax benefits are also available to employers who pay the premiums for their workers' insurance programmes.
Conclusion
A form of insurance plan known as group insurance provides coverage for a number of individuals who are employed by the same company. Given that the business pays the cost, this is frequently provided as a very useful benefit to employees. In some circumstances, the employee's family may be covered by the group's insurance. Group insurance is a pragmatic and beneficial option for covering all members of the group under a single plan. Such a programme offers several advantages to both the organisation as a whole and its individual members.
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