What is group term life insurance?

Many people are still very much confused when it comes to group term life insurance. In simple words, a group term life insurance can be defined as a contract which is issued to a person to cover more than one person. Usually, it is the companies or brands which opt for such group term life insurance. Group term life insurance given by the employer to the employee offers to cover the family members of the employee. If you think that it is not possible to have group term life insurance and an individual life insurance policy at the same time you are wrong as both can exist at a time. The employee of the company becomes eligible for this group term insurance from day one of joining the company/ organization.

How does group term life insurance work?

According to the research conducted by the Society for Human Resource Management that somewhere around 80% of companies across the globe offer its employees the paid group term life insurance as one of the many benefits. There are a certain set of eligibility requirements which an individual has to meet in the company to become eligible for the same like he/she should be a permanent employee or must have completed at least 30 days in the company, etc. Along with this group term, life insurance can also be adjusted by the employee for qualifying different life events and the time of open-employment.

Usually, the amount of coverage of this group term life insurance is equivalent to the annual salary of the employee. Under this group term insurance, the employees get paid for all the premiums relating to basic coverage by the employer and at times extra premium is also paid to the employees.

Readers should note that once an employee leaves or changes the company, he or she cannot carry forward this group term life insurance with him or her.

What are the requirements of a group term life insurance?

In the most common scenario, all the employees of the company/organization become entitled to the coverage of group term life insurance once they meet all the eligibility requirements. However, these requirements of eligibility may vary from one company to another. There will be times when the employee will only become eligible for the cover once he/she has qualified a certain life event.

In case if you are wondering about the process of getting the group term insurance cover then let us tells you that it is a quick and easy underwriting process during which the employee has to answer the questions asked to him by the company/organization.

What are the benefits of having a group term life insurance?

There is no hiding from the fact that group term life insurance offer employee's proper financial assistance and the much-needed financial independence as well from their employer. If you want to know more about this type of term insurance, then read the below-mentioned benefits of having group term life insurance.

Default insurance cover

There is no much one has to do to become eligible for the group term insurance because an employee automatically becomes eligible for it by just being part of the company/organization. This group term life insurance is best to provide basic insurance to people who at present do not have a personal life insurance policy.

Gratuity Funding

In today's date all thanks to group term insurance that the employees now have access to a systematic method of arranging for funds for the future in the form of gratuity liabilities. The life cover is provided to the employees easily.

Tax Benefits

The next benefit of group term life insurance is the tax benefits it gives to both the employer and the employee as well. According to the current Tax Laws and death, benefits are given to the employee is always exempted from the tax under section 10(10D) of the Income Tax Act. This group term insurance is helpful for the employee in two ways- employee welfare as well as retention.

It can be customized to suit the employee needs

Another benefit of group term life insurance is that it can be customized to suit the needs of the employee with add-ons for education allowance, repatriation allowance, accidental death and more with the basic cover as well.

No medical check-ups

Do you know that once you will have the group term life insurance cover you will be freed from the task of undergoing medical check-ups with your own cost as the company will be paying for the same?

It is cost-effective

When we sit to compare the premiums of all the term life insurance, the premium of group term life insurance is way too less than the usual term insurance.

Economic options for both- employer and employee

The best part about group term life insurance is that every year it is renewed, and it comes with a grace period which is mentioned on the main documents of the policy. With this cover, the employee is able to save a lot on the taxes because the premium which is paid for the same is listed under the business-related expenses. The reason why this group term insurance is great and economic for the employer as well because the cost of insurance cover for every individual is way too costly when compared to the cost of group cover.

Worldwide coverage

Last but not the least, another benefit of group life term insurance is that I offer the employee the worldwide coverage. This means that if the policyholder dies in a foreign land then in that case also the nominee will receive the payout of the policy benefits in India.

Things you should keep in mind while signing your group term life insurance policy

Now that you are aware of what is group life term insurance and also about the benefits of the same, we would like to conclude this blog by mentioning a few important things which one should keep in mind before you sign the policy papers.

  • Always read all the terms and conditions carefully

    One of the biggest and most common mistakes people make while signing the policy paper is that they don't read the terms and conditions properly and then at the time of filing the claims they are rejected. If you don't want the same happening to you as well, then read the information carefully.
  • Be honest with the details you fill in the policy form

    The second thing which one should keep in mind before signing the final policy papers is that you should be honest about all the details including your health so that there is no confusion later.
  • Don't refrain from asking any questions

    Last, if you want to ask any question then do not refrain from doing the same so that you are aware of everything related to the group term life insurance policy.

    We hope that our readers have enjoyed reading the blog and got all the information they had been looking for. If our readers want to know something more specific, then they can reach us through the comment section given below.

Disclaimer:

The article is meant to be general and informative in nature and should not be construed as solicitation material. Please read the related product brochures for exclusions, terms and conditions, warranties, etc. carefully before concluding a sale.

Consult with your financial advisor before making any decisions on insurance purchase.

*Tax benefits are as per the Income Tax Act, 1961, and are subject to any amendments made thereto from time to time

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