Life insurance is an important aspect of your arsenal against the unpredictable events of life. A practical alternative to individual life insurance is group life insurance, wherein a large number of people get coverage under a single plan. These kinds of plans are often opted for by organisations, such as corporate institutes, NGOs, housing societies, banks, NBFCs, and so on. Group plans can be beneficial in several aspects compared to individual policies. Let’s explore more on the same.
What is group life insurance and how does it work?
When multiple people are insured under one life insurance contract, it is referred to as the master group policy. The person responsible for managing the policy and deciding its various aspects is called the master policyholder. All the members insured under the plan receive life coverage as long as they are a part of the organisation. If they pass away under conditions mentioned in the policy, the insurer is liable to provide financial compensation to the beneficiaries chosen by the member.
The premium of such a master plan is determined on the basis of several factors, including the number of employees, the average age of employees, the selected coverage, and so on.
How is group life insurance advantageous for employees?
As an employee of an organisation that provides life insurance coverage, you receive the following benefits:
- Low-cost life coverage
If you were going to buy an individual life insurance policy, then the cost for the same would be much higher than the premium you would pay for a group policy. In some cases, the entire premium is paid by the employer or the master policyholder, while in others, you have to bear half of it. This is a really cost-effective way of receiving life coverage and insuring the lives of your loved ones.
- Peace of mind
Securing the future of their loved ones is an important priority in many people’s lives. You work hard today so that your family can have a happier tomorrow. That is why the worry of what might happen to them when you are no longer around would be quite understandable. With life coverage from a group insurance policy, this worry is taken away to a great extent. The sum assured amount from the policy can be a great aid to your family and help them sail through the turbulent times with their head held high.
- No need for a medical check-up
If you want to buy an individual life insurance policy, you have to undergo medical tests before you get the policy issued in your name. Such tests are more likely to be necessary if you are over the age of 40 or 50 years. In a group insurance policy, however, you do not have to undergo any such tests to be a part of the plan.
- Hassle-free life coverage
Buying a life insurance policy for yourself means that you have to do a great amount of research, undergo tests, provide lots of documentation, and so on. This hassle becomes considerably reduced when you sign up for a group insurance policy instead. What’s more, you do not have to be concerned with regular premium payments or renewal, since the premium will be cut automatically from your salary when it is due.
What is the benefit of group life insurance for employers?
Along with the employees, the employers, too, enjoy several benefits with a group life insurance, such as:
- Draw in and retain employees
Life insurance coverage is a benefit that appeals to a large number of working professionals. An organisation that provides such a benefit is more likely to draw in a larger talent pool. Additionally, it also acts as an efficient employee retention tool since the group life coverage of an employee would end if they were to leave the organisation.
- Tax benefits
According to prevalent income tax laws, businesses can claim tax exemptions on the premiums they pay for a group life insurance policy.
- Rise in productivity
Employees of an organisation that provides life insurance are likely to be more productive since they feel valued, appreciated, and taken care of within the company. The insurance coverage reassures them and motivates them to work harder, thus raising the overall morale and productivity.
A consultation with a financial expert can help employees and employers make better decisions regarding their life insurance coverage.