A group credit life insurance, also known as group credit protection, is an insurance cover that provides coverage to a group of individuals who have taken loans from a financial institution or belong to a specific association.

Designed to safeguard both lenders and borrowers, it mitigates the risks associated with loan defaults due to unforeseen circumstances such as such as disability, involuntary unemployment or critical illness.

In such unfortunate cases, the plan provides financial support to pay off the outstanding loan balance. 

The primary objective of a group credit life insurance plan is to protect lenders from potential losses due to loan defaults, while also providing borrowers with peace of mind knowing that their loan obligations would be covered under unusual circumstances.

Group Credit Life Insurance plans operate on the principle of pooling resources to provide financial protection against loan defaults. Here's a general overview of how these plans typically work: 

Step 1: Group Enrolment

A group, such as an employer, financial institution, or association, selects a Group Credit Life Insurance plan and enrols eligible members from the group.

Step 2: Premium Payment 

After enrolling the members, finalising the plan and the initial paperwork, the premium is paid. The premium for the group credit life insurance plan is calculated based on various factors, including the loan amount, the number of participants and the level of coverage chosen. The premium is often a fixed percentage of the loan amount and is incorporated into the borrower's monthly payments.

Step 3: Coverage Activation 

Post all paperwork and premium payment, participants become eligible for coverage under the plan. In the event of a covered event, such as disability or involuntary unemployment, participants can file a claim to activate the coverage.

Step 4: Claim Evaluation and Payout

The insurance provider evaluates the claim to determine its validity and eligibility for coverage. If approved, the outstanding loan balance is paid off, either partially or in full, depending on the terms of the plan. This relieves the borrower from the obligation of loan repayment and protects the lender from financial loss.

Before purchasing a group credit life insurance plan, it is crucial for any company to take the following factors into consideration and choose a plan that best aligns with the company financial goals and objectives. 

Coverage Limitations and Exclusions

Carefully review the terms and conditions of the plan to understand the coverage limitations, exclusions, waiting periods, and any pre-existing condition clauses. Ensure that the plan aligns with your specific needs and provides adequate protection for potential risks.

Financial Stability of the Provider

Research the insurance provider's financial strength and stability. A reputable and financially secure provider ensures that claims will be paid promptly and that the plan will remain viable over the long term.

Eligibility and Participation Requirements

Understand the eligibility criteria and participation requirements set by the group credit life insurance plan. Ensure that you meet the necessary criteria to enrol and receive the benefits of the plan. 

Premiums and Affordability

Evaluate the premium costs associated with the group credit life insurance and assess whether they fit within your budget. Consider the affordability of the premiums in relation to the benefits provided by the plan.

1. Digit Life Group Long Term Plan

Non-linked, non-participating, group pure risk premium life insurance plan

• Can be given to lender as well as non-lender groups.
• Provides insurance coverage to the insured members, thus financially protecting their families.
• Minimum Sum Assured ₹5,000 per person, Maximum Sum Assured No Limit.
• Inbuilt Optional Benefits like Terminal Illness, Multistage Cancer Benefit, Critical Illness etc.

Check out the complete details here.

2. Digit Life Group Micro Term Insurance

Non-linked, non-participating, group pure risk premium micro life insurance plan

• Can be given to lender as well as non-lender groups. 
• Provides insurance coverage to the insured members, thus financially protecting their families.
• Minimum Sum Assured ₹1,000 per person, Maximum Sum Assured ₹2,00,000 per person (subject to IRDA Micro Insurance Regulations 2015).
• Inbuilt Optional Benefits like Hospitalization cover, Health cover etc.

Check out the complete details here.