Even if you have an existing term plan, you are eligible for your employer’s group term insurance.
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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 secured. Here comes group term life insurance in the picture.
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.
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 for the same 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:
Group Term Life Insurance covers all members of a defined group which ensures that employees and their beneficiaries are provided with financial security. It offers a valuable safety net, assuring employees that their loved ones will be taken care of in the event of their untimely demise.
This is an excellent perk to add to employees’ sentiments and make them feel valued. Hence, adding to the retention effort.
High Morale Among Employees
Insurance coverage provided by Group Term Life Insurance policies offers financial security to employees' families. With this assurance that their loved ones are protected, employees experience reduced stress levels, leading to higher morale and enhanced productivity in the workplace.
Group Term plans are typically more cost-effective than individual life insurance plans for each employee. This affordability allows employers to provide comprehensive life insurance coverage to their employees without placing a significant financial burden on either party.
Employers can enjoy tax benefits on the premium paid towards Group Term Insurance under Section 37 (1) of the Income Tax Act. The premium amount paid by the employer is considered a business expense and can be claimed as a deduction, reducing the overall tax liability for the company.
Some Group Term Life Insurance policies include a feature that helps employers fund their future gratuity liability for employees. Gratuity is a statutory benefit that employers are required to provide to employees upon retirement, resignation, or termination. By utilizing the Group Term Life Insurance plan, employers can set aside funds to fulfill this future liability, ensuring financial security for employees even after they leave the company.
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:
Group Term Life Insurance provides a blanket coverage for all members of the defined group. This inclusivity ensures that all employees, regardless of their existing insurance coverage, receive financial security for their beneficiaries.
In the event of an employee's demise, the insurance payout acts as a safety net, providing financial support and stability to the employee's family or dependents during a challenging time.
No Medical Check-Ups
Unlike individual life insurance policies, group insurance policies do not require employees to undergo medical check-ups for enrollment. By removing this requirement, group term life insurance simplifies the insurance enrollment process, making it more accessible and convenient for employees.
Group Term Life Insurance offers a significant tax advantage for employees. The death benefit received by the beneficiaries upon the insured employee's demise is exempt from tax under section 10 (10) D of the Income Tax Act, as per the prevailing tax laws.
Customisable to Suit the Employees
Group Term Life Insurance policies often offer the flexibility to customize coverage through the addition of add-on covers and riders. These supplementary features allow employees to tailor the insurance policy to their specific needs and preferences.
What's Great About Group Term Life Insurance by Digit Life?
1. Hyper Customisability
- Get inbuilt 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 provides 3 choices to receive the death benefit. It can be paid upto the retirement age of the insured, upto a certain age of the child or upto 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 up needed in 99% cases.
- 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 case of favourable claims or long-term contracts, a part of the premium is refunded to the master policyholder, fostering a sense of partnership and profit sharing.
- Flexibility to choose your premium payment frequency, whether it's annual, half-yearly, quarterly, or monthly, enabling you to manage your cash flow efficiently.
Key Benefits of Group Term Life Insurance by Digit Life
Coverage for Spouse
Available as an Add-On
Premium Payment Options
Single Pay, Regular, One Year Renewable
Inbuilt Critical Illness Benefit
Inbuilt Accidental Death Benefit
Inbuilt Accidental Total and Permanent Disability Benefit
Inbuilt Terminal Illness Benefit
Death Benefit Payout Options
Lump Sum or Regular Income Based on Various Factors
Voluntary Insurance Coverage
Available as an Add-On for Credit Card Outstanding, Funeral Expenses, Child Education
Renewal Rate Guarantee
Available as an Add-On
FAQs About Benefits of Group Term Life Insurance
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.
As of now, individuals up to 69 years of age can avail of the group term insurance provided by their employer.
Group Term Insurance is the basic kind of term insurance with no savings component, implying its premium is much lower than life insurance plans with a savings component.
Like other term insurance plans, the tenure of group term insurance plans is 1 year and needs to be renewed annually.
Yes, you can add riders to your group term insurance policy by paying extra premium.
No, for Group Term Insurance, a medical checkup of the group member is not required for most cases.
- 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.