Posted by Group Term Life Insurance Plan
A group term life insurance policy is the name given to the insurance coverage that is made available to a group of people. Group-term life insurance plans give the employee’s family financial security in the case of the employee’s passing. Its goal is to guarantee a certain amount of money to the beneficiary of a group term life insurance policyholder if the insured passes away.
What Is A Group Term Life Insurance Plan
Group Term Life Insurance Plans are designed to offer life insurance to a group of people under a single policy, as the name suggests. In addition to employer-employee groupings, group insurance policies also cover bank clients, NGOs, professional associations, non-banking financial institutions, and microfinance organizations.
Features Of Group Life Insurance Plans
Here are a few characteristics of group life insurance plans:
1)Contract Master
Regardless of whether an employee has insurance or not, group life insurance coverage is frequently provided to them. It is a master contract in which a corporation purchases a master policy whose premium is based on the number of members and the company’s preferred sum insured amount.
2) Contributory And Non-Contributory
Contributory and non-contributory group life insurance are both available. A portion of the policy’s premium is paid by the employee, and the remainder is paid by the employer. In the latter case, the employer covers the entire premium.
3)Affordable
Compared to group life insurance, individual life insurance is more expensive. This is possible because the insurance provider can roll all of its costs, including those for administration, operation, and renewal, into a single master policy.
4)Tenure
Typically, the coverage has a one-year expiration date. After that, the policy must be renewed annually.
5)Payout For Death
The group life insurance pays the full guaranteed amount to the nominee chosen by the injured person in the tragic event that an employee passes away in an accident.
How Does A Group Term Insurance Plan Work
master policy under a group term life insurance policy requires an upfront premium from the group administrator. All members of the group are covered for a year by this one-time payment. The amount of cash assured can be chosen by group members. One-time payments, salary deductions, or loan payments might all be made with this sum. Following payment of the charge by the policyholder, the group members are protected for a year from the policy’s commencement date.
Eligibility Conditions For Group Term Insurance
- Basic Requirements
The most important precondition for joining a group insurance plan is membership in the group, which cannot have been formed only to obtain insurance.
The insurer may also set other requirements, such as group size, member entrance age, etc. If they wish to be insured under the group plan, each member of the group must meet the requirements outlined by the insurer.
- Group Size
The minimum size of the group should be 50 members, regardless of whether it is an informal group, a cultural group, a group of credit card holders, etc. Additionally, a formal group firm, organization, etc. should have at least 10 members.
The size of the group and the average age of the participants will have a significant impact on the cost of the group insurance. So, in theory, the cost of
insurance will decrease as the group size increases.
- Entry Age
The minimum entry age to be eligible for coverage under a group plan is 18, however depending on the insurance provider the group policy is purchased from, the maximum entrance age may be 65, 70, 80, or 85 years.
Varieties Of Group Term Life Insurance Plans
- Flat Covers For All Members
Some organizations give each member a flat cover or a cover that is the same for everyone. An example of flat cover is a bank that provides all of its account holders, regardless of age, with group term insurance coverage of INR 50 lakhs.
- Different Cover For Different Member
Some organizations provide various levels of coverage to their members. The employer or the organization’s chief, who is providing the insurance, will rank the members according to their level of pay, CTC, amount of outstanding debt, the number of liabilities, size of bank deposits, etc, and will then provide insurance coverage by that ranking.
- Policies With Add-Ons
You may also receive extra benefits in the form of riders with some group term insurance policies, which will pay you in certain situations. Some popular types of riders offered with group insurance include the critical illness rider, accidental death benefit rider, and accidental disability rider.
Things You Should Know About A Group Term Insurance Plan
The following are some key details regarding group term insurance policies that you should be aware of.
- Coverage Is Linked To Your Membership
Your membership with the organization or institution is a requirement for the group’s term insurance coverage. This means that if you have a group term insurance policy via your employer and decide to quit your work, or if you have a group term insurance policy through a bank and decide to shut your account with the bank, your term insurance coverage will also end.
- Low Coverage Amount
The organization or institution you are purchasing the policy from will have authority over the policy negotiations because it is a group plan. They care less about delivering you a cover that is acceptable for you or your family and instead will purchase a policy from the insurance provider that fits their budget. Therefore, there is a good probability that the coverage you receive will be quite limited and insufficient to support your family’s future financial demands.