Benefits of Group Term Life Insurance Policy
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Benefits of Group Term Life Insurance
If you are an employer, providing insurance coverage to your employees becomes an absolute necessity so that in the unfortunate case of their demise, their family is financially secure. Here comes group term life insurance.
Unlike individual life insurance policies, group term life insurance is offered as a collective benefit. Whether you are an employer considering offering group term life insurance or an employee seeking to understand the advantages it offers, this article will provide valuable insights into the benefits of this form of life insurance coverage.
Table of Contents
What is Group Term Life Insurance?
A Group Term Life Insurance is a type of insurance plan wherein a single policy covers a group of individuals. It is usually taken by employers providing life coverage to their employees wherein the Sum Assured is paid to the nominee in case of the unfortunate demise of the employee during the policy term. However, it can be taken by other affinity groups also.
Most employers prefer Group Term Insurance over Individual Term Insurance to provide financial security to the kin of their staff. The foremost reason is its cost-effectiveness over individual term insurance policies.
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:
What's Great About Group Term Life Insurance by Digit Life?
1. Hyper Customisability
- Get built-in optional benefits like Accidental Death Benefit, Terminal Illness Benefit, Critical Illness Benefit, and more.
- Add on benefits like Spouse Cover that provides coverage to the spouse of the member or Voluntary Insurance Coverage that provides financial support for various expenses like funeral, credit card outstanding or child education.
- Provides different options for death benefit payout: lump sum or regular income. The regular income option further offers 3 choices for receiving the death benefit. It can be paid up to the insured's retirement age, the child's certain age, or a certain selected time.
2. Tech-Enabled, Smooth Processes
- Minimal and online documentation makes our processes hassle-free.
- 72 hrs claim settlement with our super smooth processes.
- Worldwide coverage if your group company is based in India.
- No medical check is needed in 99% of cases.
- There is no Active at Work clause for renewals.
3. Aligned with Your Business
- By choosing the regular pay option, you can secure a premium lock for up to 3 years, providing stability and predictability in your financial planning.
- In favorable claims or long-term contracts, a part of the premium is refunded to the master policyholder, fostering a sense of partnership and profit sharing.
- The flexibility to choose your premium payment frequency, whether annual, half-yearly, quarterly, or monthly, enables you to manage your cash flow efficiently.
Why Should Employers Opt for Group Term Insurance Policy?
- Shows Genuine Employee Care: Opting for this plan demonstrates your commitment to employee well-being, not just in their careers but in their personal lives, fostering deeper trust and loyalty.
- Valuable Benefit with Easy Implementation: This plan offers a high-value employee benefit that’s simple to set up and manage, minimizing administrative burdens while maximizing the value of your benefits package.
- Grows with Your Business: As your company expands, this plan scales effortlessly, ensuring you can continue providing life insurance coverage without restructuring your benefits program.
- Enhances Recruitment and Retention: In today’s competitive job market, offering a solid group life insurance policy positions you as an employer that values its workforce, making it easier to attract and retain top talent.
- Peace of Mind Without Complications: Employees receive immediate peace of mind, knowing they and their families are protected, without the complexity of navigating the insurance market independently.
- Direct Financial Security for Families: This plan goes beyond workplace perks by providing crucial financial security to employees' families in the event of an unexpected loss, ensuring long-term reassurance.
- Hassle-Free Coverage: Employees enjoy protection without needing medical checks or tedious paperwork, making it a simple and convenient solution for their insurance needs.
- Sign of Employer Commitment: Access to this plan is more than just a financial benefit; it clearly indicates that the company values its employees' future and makes them feel appreciated and secure.
Optional Riders Available with Digit Group Term Life Insurance
The Digit Group Term Life Insurance policy offers several optional riders and features that enhance coverage for insured members. Below are the additional riders and features available:
- Additional Accidental Total & Permanent Disability Benefit: This rider provides extra coverage specifically for total and permanent disability caused by an accident.
- Additional Critical Illness Benefit: This option offers further coverage for critical illnesses beyond the standard benefits included in the policy.
- Accelerated Critical Illness Benefit: With this feature, members can receive an early payout of the critical illness benefit upon being diagnosed with a covered critical illness.
- Spouse Cover: This extends insurance coverage to the spouses of members, although it is subject to underwriting and may require additional premium payments.
- Voluntary Insurance Coverage: Members can purchase additional voluntary coverage, which is also subject to underwriting and an extra premium.
- Profit Sharing Option: If specified in the Master Policy Schedule, this option allows for profit sharing based on favorable claims experience.
- Wellness Benefit Program: This incentive program encourages insured members to maintain a healthy lifestyle by providing access to various wellness services.
Tax Benefits on Group Term Life Insurance in India
Tax Benefits for Employers
Employers can claim the premiums paid for group term life insurance as a business expense, deductible under Section 37(1) of the Income Tax Act. This helps reduce the employer’s taxable income while offering a valuable benefit to employees.Tax Benefits for Employees
1. Premiums Paid by Employer:
If the employer pays premiums up to ₹50,000, this amount is not taxable for the employee.
However, if the premium exceeds ₹50,000, the excess is treated as a taxable perquisite, meaning it gets added to the employee’s taxable income.
2. Death Benefit:
Any payout received by the nominee as a death benefit is fully exempt from tax under Section 10(10D) of the Income Tax Act.
3. Supplemental Coverage:
If employees opt for additional coverage by paying premiums themselves, they can claim tax deductions under Section 80C for the premiums paid.
Group term life insurance is a powerful way to protect employees financially while offering employers a cost-effective, morale-boosting benefit. Its affordability, ease of implementation, and tax advantages make it an appealing choice for businesses looking to support their workforce. For employees, it brings peace of mind, knowing that their loved ones are cared for without the need for complicated enrollment processes or medical exams.
As a flexible solution, it can be tailored to meet individual needs, making it an intelligent and thoughtful addition to any company’s benefits package. Choosing a reliable plan like Digit Life’s ensures that the employer and the employee are well-protected, with the added benefit of simplicity and customization.
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?
I already have a group term plan from my employer. should I purchase another individual term plan?
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?
Does group term life insurance have a cash value?
What is the tenure of a group term insurance plan?
Are riders available under group term insurance plans?
Do I need a medical checkup to enroll in group term insurance?
How does group term insurance work for employees?
What are the death benefits of group life insurance?
What is the coverage provided by group term life insurance?
What are the premiums for group life insurance?
How can I claim benefits from group term life insurance?
Are there any exclusions in group term life insurance?
What are the key benefits of group term life insurance for employers?
Can employees customize their coverage under group term life insurance?
How does group term life insurance enhance employee morale?
What optional riders can be added to group term life insurance policies?
Is there a waiting period before coverage begins under group term life insurance?
What happens to the group term life insurance coverage if an employee leaves the company?
Are there any limitations on the coverage amount in group term life insurance?
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?
What is the claims process for group term life insurance?
Are death benefits taxable for beneficiaries of group term life insurance?
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Disclaimer
- 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.