Group Term Life Insurance Policy – Plans & Benefits

Introduction

Rakesh worked with an MNC in Gurgaon. His company offered a group term life insurance policy to protect the employee’s family in case anything happens to Rakesh. Other colleagues were also included in the policy. One co-worker, Manav, passed away while at work in the factory. His family was given the death benefit of up to Rs.1 crore (as per the terms and conditions of the policy). The amount was enough for Manav’s family because, by the time he passed away, the family had to pay the home loan. For them, the death benefit money was sufficient enough to restart their life after Manav passed away. The group term life insurance saved the family from irreversible downfall because the breadwinner was not alive.

The life insurance policy has its own benefits that bring happiness for the dependents in the family.

If you are interested to know more about the policy, read further.

Table of Content

What is a Group Term Life Insurance Policy?

How does a Group Term Life Insurance Policy Work?

Group Term Life Insurance Benefits

Features of the Group Term Insurance Policy.

Is group term insurance policy sufficient for an individual or employee in the group?

Conclusion

What is a Group Term Insurance Policy?

A group term insurance policy is a life insurance policy offered to a group of people working together. The policy provides financial security, for the policy duration, to the dependents/beneficiaries of the individuals who are covered under the same plan. The loss is payable only if something unfortunate happens during the policy period.

Quick Facts:

  • A group term insurance policy is a useful financial product that is useful when you are single or do not have any dependents.
  • The policy benefits may be insufficient, at times, if a large family depends on you. It is because the needs may be more when valued for money. The claim amount may not be enough to manage the financial needs of the family.

How does a group term insurance policy work?

This is the way a group term insurance policy works.

  • A master group term insurance policy is issued to a group administrator, for which he pays the first premium.
  • This initial premium contribution covers all of the group’s members for a one-year period.
  • Members of the group have the option of selecting the sum assured. This sum assured can be a one-time payment or connected to a salary or loan account, for example.
  • After the policyholder pays the premium, the members are protected under the group term life insurance for a year from the policy’s start date.
  • The group life insurance plans are renewable on an annual basis.
  • The premium of the group term insurance policy is charged variable depending on the size of the group. The age of the members in the group also affects the premium amount.

After reading how the group term insurance works, let us understand the benefits of the policy.

Group Term Insurance Life Insurance Benefits 

The group term insurance policy is a life protection cover that the employer can arrange for the employees. The sense of security that any employee can offer to their family can motivate them to work for the company. Let us now read the benefits of the life insurance policy:

  • The employees covered under the policy can enjoy the ease of not having to undergo medical examinations until their free coverage runs out.
  • Employees can take advantage of Section 10 death benefits, which are tax-free (10D).
  • Employees are offered guaranteed financial support for their families in the event of their death, serious sickness, or other unforeseen circumstances. It brings peace to their mind giving them a sense of security for the place they work.
  • There is not much hassle to manage the policy. Only one document is issued for all the employees, which makes policy management easy.
  • The group term insurance policy can be customized conveniently to meet the needs of the employees that are covered under the policy.
  • The policy protects the emergency requirements of the insured.

Features of the Group Term Insurance Policy 

These are the features of the Group Term Insurance Policy that may motivate you to purchase the policy:

  • Flexible Plan: The policy allows the life insured to add any members at any time of the year.
  • Age: The minimum age for enrolling any individual into a group term life insurance policy is 18 years. At the same time, the maximum age at the time of enrolling in the policy is 69 years.
  • Fixed Payout: The amount of claim payable is pre-decided. The beneficiary of the insured will receive the death benefit.
  • Provision for add-on covers: The additional covers are called riders that increase the scope of the insurance policy. Some of the riders cover that you can add include cover for critical illnesses, accidental deaths, disabilities, etc.
  • Group Size: The minimum size of the group is 50 members that can take the group term insurance policy.
  • Process: The group term insurance policy is a convenient and quick policy.
  • Terminal Illness Benefit Covered: The life insurance policy comes with the terminal illness benefit. This indicates that if any employee/group member is diagnosed with an illness that will lead to death within six months, the beneficiaries will receive the death benefit.
  • Cost-effective: A group term insurance policy turns out to be more cost-effective than the individual life insurance policy. It is cheaper than the premium amount, which will be payable under the individual life insurance policy.

The features of the group term insurance policy signify that the employees can avail the benefits and feel protected even while they are at work.

Is group term insurance policy sufficient for an individual or employee in the group?

A group term insurance policy is a cost-effective insurance policy that saves you a lot of pennies for the great security offered. But understand that the policy benefits apply only to the amount you are working with the company. The moment you choose to resign or change your job, you will not be covered.

In such a scenario, your dependent family members will be deprived of all the policy benefits. To resolve the issue with better and continuous security, it is important that you have an individual life insurance policy. With an individual term life insurance policy, you can:

  1. Choose the amount of coverage for yourself, to be precise.
  2. Get discounts on the renewal premium if the entire year, you do not file for a claim.
  3. Choose additional rider covers according to your requirements.

Be it a group term life insurance policy or an individual term insurance policy; it is important that you own a policy. The prime motive is to keep the family feels protected and financially stable in the absence of the life insured.

EndNote:

The group term life insurance policy is the best bet the employer plays to keep the employee motivated. So far, the intent is to offer umpteen security to the family of the employees; it is a good game. The group term life insurance policy is too much a security for those who cannot afford any individual life insurance policy. If, despite the group term life insurance policy, you are interested in purchasing a term plan, read here.

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Group Term Life Insurance Policy - Plans & Benefits - InsightsSuccess

Group Term Life Insurance Policy – Plans & Benefits

Introduction

Rakesh worked with an MNC in Gurgaon. His company offered a group term life insurance policy to protect the employee’s family in case anything happens to Rakesh. Other colleagues were also included in the policy. One co-worker, Manav, passed away while at work in the factory. His family was given the death benefit of up to Rs.1 crore (as per the terms and conditions of the policy). The amount was enough for Manav’s family because, by the time he passed away, the family had to pay the home loan. For them, the death benefit money was sufficient enough to restart their life after Manav passed away. The group term life insurance saved the family from irreversible downfall because the breadwinner was not alive.

The life insurance policy has its own benefits that bring happiness for the dependents in the family.

If you are interested to know more about the policy, read further.

Table of Content

What is a Group Term Life Insurance Policy?

How does a Group Term Life Insurance Policy Work?

Group Term Life Insurance Benefits

Features of the Group Term Insurance Policy.

Is group term insurance policy sufficient for an individual or employee in the group?

Conclusion

What is a Group Term Insurance Policy?

A group term insurance policy is a life insurance policy offered to a group of people working together. The policy provides financial security, for the policy duration, to the dependents/beneficiaries of the individuals who are covered under the same plan. The loss is payable only if something unfortunate happens during the policy period.

Quick Facts:

  • A group term insurance policy is a useful financial product that is useful when you are single or do not have any dependents.
  • The policy benefits may be insufficient, at times, if a large family depends on you. It is because the needs may be more when valued for money. The claim amount may not be enough to manage the financial needs of the family.

How does a group term insurance policy work?

This is the way a group term insurance policy works.

  • A master group term insurance policy is issued to a group administrator, for which he pays the first premium.
  • This initial premium contribution covers all of the group’s members for a one-year period.
  • Members of the group have the option of selecting the sum assured. This sum assured can be a one-time payment or connected to a salary or loan account, for example.
  • After the policyholder pays the premium, the members are protected under the group term life insurance for a year from the policy’s start date.
  • The group life insurance plans are renewable on an annual basis.
  • The premium of the group term insurance policy is charged variable depending on the size of the group. The age of the members in the group also affects the premium amount.

After reading how the group term insurance works, let us understand the benefits of the policy.

Group Term Insurance Life Insurance Benefits 

The group term insurance policy is a life protection cover that the employer can arrange for the employees. The sense of security that any employee can offer to their family can motivate them to work for the company. Let us now read the benefits of the life insurance policy:

  • The employees covered under the policy can enjoy the ease of not having to undergo medical examinations until their free coverage runs out.
  • Employees can take advantage of Section 10 death benefits, which are tax-free (10D).
  • Employees are offered guaranteed financial support for their families in the event of their death, serious sickness, or other unforeseen circumstances. It brings peace to their mind giving them a sense of security for the place they work.
  • There is not much hassle to manage the policy. Only one document is issued for all the employees, which makes policy management easy.
  • The group term insurance policy can be customized conveniently to meet the needs of the employees that are covered under the policy.
  • The policy protects the emergency requirements of the insured.

Features of the Group Term Insurance Policy 

These are the features of the Group Term Insurance Policy that may motivate you to purchase the policy:

  • Flexible Plan: The policy allows the life insured to add any members at any time of the year.
  • Age: The minimum age for enrolling any individual into a group term life insurance policy is 18 years. At the same time, the maximum age at the time of enrolling in the policy is 69 years.
  • Fixed Payout: The amount of claim payable is pre-decided. The beneficiary of the insured will receive the death benefit.
  • Provision for add-on covers: The additional covers are called riders that increase the scope of the insurance policy. Some of the riders cover that you can add include cover for critical illnesses, accidental deaths, disabilities, etc.
  • Group Size: The minimum size of the group is 50 members that can take the group term insurance policy.
  • Process: The group term insurance policy is a convenient and quick policy.
  • Terminal Illness Benefit Covered: The life insurance policy comes with the terminal illness benefit. This indicates that if any employee/group member is diagnosed with an illness that will lead to death within six months, the beneficiaries will receive the death benefit.
  • Cost-effective: A group term insurance policy turns out to be more cost-effective than the individual life insurance policy. It is cheaper than the premium amount, which will be payable under the individual life insurance policy.

The features of the group term insurance policy signify that the employees can avail the benefits and feel protected even while they are at work.

Is group term insurance policy sufficient for an individual or employee in the group?

A group term insurance policy is a cost-effective insurance policy that saves you a lot of pennies for the great security offered. But understand that the policy benefits apply only to the amount you are working with the company. The moment you choose to resign or change your job, you will not be covered.

In such a scenario, your dependent family members will be deprived of all the policy benefits. To resolve the issue with better and continuous security, it is important that you have an individual life insurance policy. With an individual term life insurance policy, you can:

  1. Choose the amount of coverage for yourself, to be precise.
  2. Get discounts on the renewal premium if the entire year, you do not file for a claim.
  3. Choose additional rider covers according to your requirements.

Be it a group term life insurance policy or an individual term insurance policy; it is important that you own a policy. The prime motive is to keep the family feels protected and financially stable in the absence of the life insured.

EndNote:

The group term life insurance policy is the best bet the employer plays to keep the employee motivated. So far, the intent is to offer umpteen security to the family of the employees; it is a good game. The group term life insurance policy is too much a security for those who cannot afford any individual life insurance policy. If, despite the group term life insurance policy, you are interested in purchasing a term plan, read here.

Next Post

Recent News

Path Breakers