Benefits of Group Term Life Insurance Policy

Benefits of Group Term Life Insurance Policy
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Benefits of Group Term Life Insurance

What is Group Term Life Insurance?

Benefits of Group Term Life Insurance Policy to the Employers 

Below are the Group Term Life Insurance benefits that make it the perfect plan for the employer:

Employee Retention

Group Term Life Insurance gives employees financial security by covering them and their families. Offering this benefit builds loyalty and improves retention, as employees feel valued knowing their loved ones are protected.

High Morale Among Employees

With this insurance, employees can feel more at ease knowing their families are protected. This peace of mind leads to higher morale, increased focus at work, and better overall job satisfaction.

Affordable

Group policies are generally more budget-friendly than individual plans. Employers can provide this valuable coverage at a lower cost, making it an affordable benefit for both the company and its employees.

Customizable Plans

Employers have the flexibility to add extra coverage options, like Terminal Illness or Accidental Death benefits, making the policy more tailored to their employees' specific needs.

Easy to Manage

Managing Group Term Life Insurance is straightforward, with minimal paperwork and simple claims processes. This ease of administration reduces the burden on employers.

Tax Benefits 

Employers can deduct premiums paid for Group Term Insurance as a business expense under Section 37(1) of the Income Tax Act, lowering overall tax liability. The policy's claims processing and risk management guidelines also make it a cost-effective investment for managing employee benefit risks.

Benefits of Group Term Life Insurance Policy to the Employees 

Below are the Group Term Life Insurance benefits that make it the most sought-after employment benefit for the employee:

Comprehensive Insurance Cover

Group Term Life Insurance offers full coverage for employees, ensuring financial protection for their families in case of the employee’s death. Riders like Terminal Illness, Critical Illness, and Accidental Death can be added to enhance coverage based on individual needs.

No Medical Check-Ups

Employees can join without needing medical check-ups, making Group Term Life Insurance accessible to everyone, even those with pre-existing conditions.

Tax Exemption

The death benefit received by the employee’s beneficiaries is fully tax-exempt under Section 10(10D), ensuring that the entire amount reaches the family without deductions.

Customisable to Suit the Employees

Employees can enhance their coverage with pre-selected riders like Critical Illness or Accidental Death, allowing them to tailor the policy to fit their needs.

Support for Financial Planning

Group Term Life Insurance provides a guaranteed death benefit, helping employees plan for future needs like education, mortgage payments, or retirement. This assurance allows them to manage their finances more effectively, knowing their families will have financial support if something happens.

Boosts Morale and Loyalty

Offering Group Term Life Insurance fosters a sense of security, which boosts employee morale. When employees feel their well-being is valued, loyalty and engagement increase, contributing to a positive workplace culture.

Key Features of Group Term Life Insurance Plan by Digit

The Digit Group Term Life Insurance plan offers essential features designed to provide comprehensive coverage and peace of mind for both employers and employees. Below is a summary of its key features and their descriptions:

Features Description
Type of Policy A Non-Linked Non-Participating Group Pure Risk Premium Life Insurance Plan
Coverage Financial protection against the risk of death, offering a safety net for the beneficiaries of insured members.
Optional Benefits Includes coverage for Terminal Illness, Critical Illness, Accidental Death, and Accidental Total and Permanent Disability.
Payout Options Death benefits can be provided as a lump sum or regular income. tailored to meet the beneficiaries' needs.
Freelook Period There is a 15-day (or 30-day for distance marketing) period during which policyholders can review the terms and cancel.
Tax Responsibilities Applicable taxes (including GST & Cess) are the responsibility of the master policyholder or member.
Online Management Access to an easy-to-use online portal for managing the policy.
Risk Commencement Coverage begins once premiums are received and underwriting criteria are met.

What's Great About Group Term Life Insurance by Digit Life?

Why Should Employers Opt for Group Term Insurance Policy?

Optional Riders Available with Digit Group Term Life Insurance

Tax Benefits on Group Term Life Insurance in India

FAQs about Benefits of Group Term Life Insurance

I already have an individual term plan. Am I still eligible for the employer group term insurance?

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Even if you have an existing term plan, you are eligible for your employer’s group term insurance.

I already have a group term plan from my employer. should I purchase another individual term plan?

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A group term plan does provide financial security to your family in case of your untimely demise. However, that coverage may not be sufficient. Furthermore, this coverage ceases if you change jobs, are laid off, or leave the employer for any reason.

Hence, assess your needs and based on them, you may buy another individual term plan if required.

What is the maximum age of entry for the group term plan?

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Now, individuals up to 69 can avail of the group term insurance their employer provides.

Does group term life insurance have a cash value?

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Group Term Insurance is the essential kind of term insurance with no savings component, implying its premium is much lower than life insurance plans with a savings component.

What is the tenure of a group term insurance plan?

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Like other term insurance plans, group term insurance plans last one year and must be renewed annually.

Are riders available under group term insurance plans?

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You can add riders to your group term insurance policy by paying an extra premium.

Do I need a medical checkup to enroll in group term insurance?

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No, for Group Term Insurance, a medical checkup of the group member is not required for most cases.

How does group term insurance work for employees?

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Employers purchase the policy on behalf of their employees. All eligible members are covered under the same policy, and employees do not need to undergo individual medical tests or underwriting. The coverage is usually active as long as the individual is employed by the company.

What are the death benefits of group life insurance?

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In Group Life Insurance, the death benefit is a predetermined sum paid to the beneficiary in the event of the insured member's death during the policy term. This benefit ensures financial support for the member's family or dependents. Additionally, some policies may offer enhanced benefits for accidental death or other optional coverages chosen by the employer.

What is the coverage provided by group term life insurance?

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Group Term Life Insurance primarily provides financial protection to beneficiaries in the event of an insured member's death. Additionally, optional coverage may be available for terminal illness, critical illness, accidental death, and permanent disability. Some policies also offer add-on benefits, like spouse coverage and voluntary insurance for specific needs, making it a flexible and cost-effective solution for employers.

What are the premiums for group life insurance?

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Due to the group nature of the coverage, premiums for group life insurance tend to be lower than those for individual policies. The exact amount is determined by the employer's master policy and typically specified in the policy schedule.

How can I claim benefits from group term life insurance?

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To claim benefits, the policyholder or nominee must notify the insurer within a set period (typically 90 days) and submit necessary documents, including medical records or proof of the event that led to the claim.

Are there any exclusions in group term life insurance?

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Yes, like all insurance policies, there are exclusions. These can include deaths resulting from suicide within the first year of coverage, pre-existing conditions, or other specific circumstances detailed in the policy.

What are the key benefits of group term life insurance for employers?

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Group Term Life Insurance offers several advantages for employers, including cost savings on premiums, simplified administration through a master policy, and potential tax benefits on the premiums paid. It also helps attract and retain talent by enhancing employee benefits.

Can employees customize their coverage under group term life insurance?

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Employees can customize their coverage under the Group Term Life Insurance policy. The Master Policyholder offers various options for insured members, including different benefit options, coverage terms, premium payment terms, and sum assured amounts.

How does group term life insurance enhance employee morale?

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Group term life insurance can significantly boost employee morale by providing financial security for employees' families. Knowing their loved ones are protected in an unforeseen event allows employees to focus better on their work.

What optional riders can be added to group term life insurance policies?

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Group Term Life Insurance policies offer several optional riders to enhance coverage. These include additional coverage for critical illnesses, total and permanent disability benefits, spouse coverage, and wellness programs to encourage a healthy lifestyle.

Is there a waiting period before coverage begins under group term life insurance?

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Typically, coverage under a Group Term Life Insurance policy starts once the premium is received and any required underwriting criteria are met. There is usually no waiting period, ensuring immediate financial protection for insured members.

What happens to the group term life insurance coverage if an employee leaves the company?

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Generally, the coverage provided under Group Term Life Insurance ceases when an employee leaves the company. However, some employers may offer options for employees to convert to an individual policy or provide continuation of coverage for a limited period.

Are there any limitations on the coverage amount in group term life insurance?

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Yes, the coverage amount is limited. The maximum sum assured for each member under the death or optional benefits is subject to the insurance company's underwriting policy, which may vary.

 

How do employees enroll in group term life insurance?

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Employees are usually enrolled in Group Term Life Insurance through their employer during an open enrollment period or when they join the company. Enrollment is typically straightforward and requires minimal information from the employee.

What is the claims process for group term life insurance?

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The claims process involves notifying the insurer within a specified period and submitting necessary documentation, such as proof of death. The policyholder or beneficiary can initiate this process through the employer.

Are death benefits taxable for beneficiaries of group term life insurance?

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Generally, the death benefits paid to beneficiaries from a Group Term Life Insurance policy are tax-exempt under the Income Tax Act. This means beneficiaries can receive the total amount without tax deductions, providing essential financial support during difficult times.

Disclaimer

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  • This is an informative article provided on 'as is' basis for awareness purpose only and not intended as a professional advice. The content of the article is derived from various open sources across the Internet. Digit Life Insurance is not promoting or recommending any aspect in the article or its correctness. Please verify the information and your requirement before taking any decisions.
  • All the figures reflected in the article are for illustrative purposes. The premium for Coverage that one buys depends on various factors including customer requirements, eligibility, age, demography, insurance provider, product, coverage amount, term and other factors
  • Tax Benefits, if applicable depend on the Tax Regime opted by the individual and the applicable tax provision. Please consult your Tax consultant before making any decision.

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