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What are the Benefits of Group Term Life Insurance Plans?

Aug 25, 2022

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Group Term Life Insurance Policy

What are the Benefits of Group Term Life Insurance Plans?
Contents

A Group Term Life Insurance Policy is an important part of the employee benefits package along with the Group Personal Accident Insurance Policy and Group Medical Insurance Policy. This article will explain the benefits of a Group Term Life Insurance Policy in detail

What is a Group Term Life Insurance Policy?

A Group Term Life Insurance Policy is an Insurance Policy which provides life cover to the Insured Members (employees) and pays compensation to the family members in case of the death of the Insured Employee during the Policy Term.

A Group Term Life Insurance Policy is also known as a GTL Insurance Policy. A Group Term Life Insurance Plan is usually purchased by the employers for their employees.

How does a Group Term Life Insurance Policy work?

As discussed, an employer usually purchases a GTL Insurance Policy for his employees.

The employer pays the premium and a master policy is issued with all the employees covered as part of a single Group Term Life Insurance Policy. The GTL Insurance Policy usually covers employees from the age of 18 to 65 years.

The Sum Assured for each employee in a Group Term Life Insurance Policy can be chosen by the employer based on designation and experience.

The GTL Insurance Policy has a term of 1 year after which the policy has to be renewed. The employee’s family member is the beneficiary of the death benefit in case of the death of the Insured employee.

What are the benefits of Group Term Life Insurance Policy?

A Group Term Life Insurance Policy offers benefits to both, the employer and the employee.

Benefits of a Group Term Life Insurance Policy for Employees:

  1. Tax Benefits: The amount received by the insured employee’s family members as death benefit under a Group Term Life Insurance Plan is completely tax-free as per the Section 10(10D) of the Income Tax Act of 1961.
  2. Cost Effective: The premium/person for a Group Term Life Insurance Policy is cheaper than the premium/person for an Individual Term Life Insurance Policy for same Sum Assured.
  3. No Medical Tests Required: Employees covered under a Group Term Life Insurance Plan need not undergo medical checkups unlike an Individual Term Life Insurance Policy where the person looking to get covered will need to undergo a health checkup.
  4. Financial Security for Family Members: Employees covered under a Group Term Life Insurance Plan can rest assured that their family members are well taken care of in case something happens to them. The amount received as death benefit in a Group Term Life Insurance Policy can be used to cover major expenses such as a Child’s education or marriage expenses.
  5. Simple Claims Settlement Process: The employer usually takes care of the Claims Settlement in a Group Term Life Insurance Plan. Additionally, the Claim Settlement Process of a Group Term Insurance Plan is quicker as compared to an Individual Term Life Insurance Policy.

Benefits of a Group Term Life Insurance Policy for Employers:

  1. Boosts employee productivity and reduces attrition: Employees covered under a Group Term Life Insurance Policy are more likely to stay at an organisation since they are aware that the company has taken care of major expenses in case of their death.
  2. Customised Coverage: Employers can customise Group Term Life Insurance Coverage by opting for different add-on Covers such as Critical Illness rider or Total and Permanent Disability Rider.
  3. Tax Benefits: The premiums paid by the employer towards Group Term Life Insurance Premiums are a Tax-Deductible expense for the employer.

Should I buy an Individual Term Life Insurance Policy even if I am covered by the Group Term Insurance Policy offered by my Employer?

Yes, employees should supplement their Group Term Life Insurance Coverage by purchasing an Individual Term Life Insurance Policy. This is because once an employee leaves the organisation, he/she will also be removed from the scope of the Group Term Life Insurance Cover.

Additionally, the Sum Assured provided under a Group Term Insurance Plan provided by the employer might not be adequate and it might be necessary to opt for an additional cover with an Individual Term Insurance Policy.

Hence, relying only on the Group Term Life Insurance Cover provided by the employer is not a prudent decision.

Final Take

A Group Term Life Insurance Policy is an excellent tool to provide safety net to the employees and their family members. Employers should provide a Group Term Life Insurance Plan in combination with a GPA Insurance Policy and Group Health Insurance Policy as part of a Comprehensive employee benefits package. The investment will certainly payoff in terms of increased employee productivity and retention.

Qian has tie-ups with top Group Term Life Insurance Companies in India to assist companies with their Group Term Life Insurance requirements. If you wish to purchase a Group Term Life Insurance Policy for your employees, you can email us at 📧 support@qian.co.in or call us on 📞 022-35134695.

We would be glad to assist you.

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