What is Group Life Insurance?

A group life insurance is a term insurance plan that offers insurance benefits to a specific group of individuals. This group can either be employees in an organization, members of non profitable organizations, members of a union, etc. This insurance plan covers all the members of a particular group in a single plan.

Group life insurance is used by companies providing insurance benefits to their employees. These plans are provided at affordable premiums without any requirement for medical tests. Generally, the premium of life insurance is either paid by the group owner or shared in a specific ratio between the group owner and group members. In case of the unfortunate demise of any group member, death benefits are paid to their family members and the policy lapses.

Features of Group Life Insurance

Group Life Insurance has several features that make it different from other life insurance policies :

1. Affordable

   Group Life Insurance is available at an affordable cost when compared to an individual policy. The number of individuals covered in group life insurance is large which helps an insurer to club their overall expenses such as administrative and operational costs. Thereby reducing the overall premium amount.

2. Master contract

   In group life insurance, all the individuals are covered under a single policy or contract which is known as a master contract. The premium charged by insurance companies depends upon the number of members in a group. The existing group members may leave and some new members may join the group. With an increase in group members total premium increases and with a decrease in the group members total premium decreases.

3. Contributory or non-contributory plan

   A group life insurance is either a contributory or non-contributory plan. In a contributory group life insurance, most of the premium is paid by the employer while a nominal amount is paid by the employee. In a non-contributory plan, the whole premium is paid by the employer and the employee has no financial burden on their shoulders.

4. Coverage

   All the group members are covered in the insurance policy as long as they are part of the group. After a member exits the group their policy also comes to an end. In case the group member passes away, the death benefits will be paid to their nominee.

Benefits of Group Life Insurance

When it comes to insuring a group of people, a group life insurance policy comes in handy in many ways. Let us look at some of the key benefits a group life insurance plan offers:

1. Coverage

   As soon as an individual joins a group they are included in group life insurance and the benefits become active from the joining date if there is any existing group life policy. If the individual does not have any personal life insurance policy they still get coverage under the group insurance. The group insurance becomes inactive for a member when they leave the group or organization.

2. Tax Benefits

   Group Life Policy provides tax benefits to employers as well as employees. If the insurance premium is paid by the employer for their benefits they are entitled to tax benefits under Section 37 (1) of the Income Tax Act of 1961. If employees are paying certain premiums as a part of their group life policy they can avail tax benefits under Section 80 C and Section 10 (10D) of Income Tax Act, 1961.

3. Hassle-free premium payment

   Sometimes people face the problem of missing their premium which can attract penalties. In group life insurance there is no such issue as the premium amount would be automatically deducted while processing the salary if they pay a part of premiums. In this way, the insured does not miss any premium amount and avoids penalties.

4. Death benefits

   If there is a sudden demise of any group member the applicable death benefits will be paid to the beneficiary of the member. It helps them to complete their financial obligations even in the absence of the earning member.

5. Easy claim process

   The claim settlement process of a group life insurance is easy and hassle-free. In case of a group member's uncertain demise, their beneficiary can claim the death benefits directly from the insurance provider.

6. Affordable premiums

   Group Life Insurance policies are available at affordable premiums as compared to individual life insurance policies. This is because there are a number of members who are covered in a single group life insurance.

7. Protection against credits or loans

   Group Life Insurance provides the group members with protection against credits or ongoing loans in the event of uncertain demise. The death benefit can be utilized to pay the loans in case of the policyholder's demise. It protects their nominee from the financial burden of paying their debts.

Conclusion

Group Life Insurance provides financial protection to all the members of a group at an affordable cost. Rather than buying an individual insurance plan for every group member, group life insurance provides benefits to group members under a single master contract. With hassle-free premium payment and easy to manage options this insurance policy is an ideal choice for organizations or any group which caters to a large number of members.

Life Insurance Companies

Compare and buy the most suitable Life Insurance Plan from the below-mentioned IRDAI-approved Life Insurance companies.