Group Term Life Insurance
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What is Group Term Life Insurance?
Group Term Life Insurance is one of the benefits that employers offer to their employees. It is a type of life insurance that provides coverage for a specific group of people. It is an affordable way to ensure financial security for employees and their families in case of the unfortunate demise of the policyholder.
For instance, suppose one of your employees dies in an accident while travelling to the office. Since your employee was covered under a group-term life insurance policy, the family of the deceased will get compensation up to the sum assured mentioned in the policy document.
To put it simply, the insurer pays a lump-sum benefit to the designated beneficiary if the insured person passes away during the policy term. It is often provided as part of employee benefits packages, resulting in the cancellation of the policy when an employee resigns from their employment services. Group term insurance plans are more affordable in comparison to other individual term life insurance policies.
- No Pre-Medical Examination: Many group-term life insurance plans do not require policyholders to undergo a medical exam. This can make it easier for individuals with pre-existing medical conditions to obtain coverage.
- Affordable: Group term life insurance is generally more affordable than individual term plans because many people are covered under the same insurance plan. Therefore, it acts as an attractive option for employers to offer as a benefit to their employees.
- Customized Easily: Employers can purchase various add-ons like tuition premiums. repatriation allowance, accidental death, and more to enhance the coverage of their group term life insurance policy.
- Tax Benefits: A death benefit received against group term life insurance is tax-free under Section 10 (10D) of the Income Tax Act, 1961.
Frequently Asked Question
- 1
What is the minimum sum assured limit under group term life insurance?
The minimum sum assured ranges between Rs. 1,000 and Rs. 5,000, depending on the type of plan you purchase.
- 2
Is it possible to continue group-term life insurance after leaving an organization?
If the policyholders want to continue to enjoy the benefits of group-term life insurance plans even after leaving an organization, they can port the plan into an individual term insurance plan.
- 3
Is maturity benefit paid under group term life insurance plans?
Under group-term life insurance plans, an insurance company is liable to pay only the death benefit to the family upon the demise of the life assured.
- 4
Does the group term life insurance plan offer any riders?
Yes, policyholders of group term insurance can buy various riders, including a critical illness benefit rider and an accidental death benefit rider, by paying an extra premium to the insurer.
- 5
What is the policy tenure of the group term life insurance plan?
Generally, the policy tenure for a group term insurance plan is one year. However, policyholders can renew their policy before the policy expiration date.