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Who can Buy Group Term Life Insurance in India?

dateKnowledge Centre Team dateMay 06, 2021 views117 Views
Who can Buy Group Term Life Insurance in India?

‘The more the merrier,” is an old saying for a few situations where having more people puts them all in a better situation. Insurance plans are inherently a social construct, the more people you insure, the better it gets for everyone around.

Group insurance plans have been a great way to ensure financial protection for people involved in similar activities. For instance, people travelling together to a certain place, employees working in an organisation, group of professionals engaged in similar activity, etc.

Buying Group Term Life Insurance

Contrary to the popular belief, employer-employee groups are not the only ones eligible for this policy. Any group which consists of people with homogeneous interests and risks is eligible for a group term life cover. For clarity understand this, that a credit card company, which offers credit cards to the salaried class individuals who are employed at offices, can buy a group term life policy on the lives of its customers.

Similarly, other groups will also qualify for group term life cover:

  • Banks and lenders like housing finance companies for their customers
  • Non-banking financial institutions (NBFCs) for customers (depositors) or borrowers
  • Microfinance institutions
  • Professional groups such as engineering society, medical fraternity, etc.
  • RWAs catering to a specific group of residents
  • Employee unions or other organisations

Thus, any homogeneous groups formed for any purpose other than buying life insurance can purchase group term life cover for the members.

Why Buy a Group Term Life Cover?

  • Provide a value add to the employees / group members
  • Ensure financial survival of your employees’ / group member’s families
  • Build on your image as a caring enterprise / group
  • Enjoy social support for your cause / business

How Does Group Term Life Insurance Work?

  • A group head receives the policy after paying an initial premium value. All employees of the organisation including you are eligible for the benefits of a term insurance plan after the payment of this initial amount for one year.
  • You as an employee have the advantage to select the sum assured either in one time or can link the same with the salary account.
  • After the payment of the premium, the policyholder and all employees are covered under a group term insurance plan for the tenure of 12 months from the date when the policy began.
  • The group term insurance can be renewed on yearly basis. The premium value is subject to change according to the change in the size of the group.

Features of Group Term Life Insurance in India

  • Addition of members in the policy anytime during the year
  • A predetermined amount is payable to the family in case of your death
  • Additional rider covers such as critical illnesses, accidental deaths, disabilities, etc.
  • Cost-effective in comparison to individual policy cover
  • You can enjoy the benefits of insurance cover at a cheaper rate

You can have a group term life insurance from the organisation as it ensures financial security for you and your family. The coverage of best group term life insurance depends upon your job level in the organisation. You have to contribute partly to the premium payable for availing group term insurance. The premium for this policy is payable on a yearly/semi-annually/quarterly/monthly basis.

The employer buys the policy for the eligible group of employees. The employer is the policyholder for this policy, which is a single policy for a group of professionals working in the organisation. However, you as an employee avail the benefits of group term life insurance cover.

Meaning, in case of your untimely demise your family will receive the benefit amount from the cover. All employees aged between 18 and 60 are eligible for the cover.

An employer offers a financial safety net to you by covering you under the best term life insurance. Your family is also been taken care of in case you encounter a permanent disability/death/ accidental injury while working with the organisation. The online term plan offers the same benefit to all employees and the policy does not have a maturity period. The term life insurance remains active until you leave the organisation.

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Frequently Asked Questions (FAQs) for Term Insurance

A person can only purchase a term insurance plan till the age of 65 years, and they can choose the risk coverage for up to 99 years of age. One can easily buy the best online term plan between the age of 18 to 65 years.

This being a term plan doesn't offer any payout after maturity or expiration date.

Each insurance company has its own term insurance premium calculator. If you want to check out the premium quote, go for the iSelect Star term plan calculator. It gives a premium amount based on your age, gender, habits, education, and annual income.

You can purchase an iSelect Star term plan anytime between 18 to 70 years of age.

It depends on your needs. For example, if you want to cover a child's education or wedding expenses, you have to include them in your coverage. Your premium will be calculated accordingly.

If your key purpose is to give your Family financial protection, go for the term insurance plan. And if you want some savings, in the end, go for a traditional life insurance plan.

Go for at least 12 times cover than your annual income. Or you can go as far as 20 times coverage as per your needs.

The right time is when you don't have anything to keep your Family safe from financial storms, and they rely on you for financial needs.

If you are unable to make the payment or suffering from a terminal illness, a term plan pays a part of the sum insured to treat your disease.

Term insurance riders are attachment or endorsements made, while taking the term insurance policy, as a supplementary coverage to policyholders. Apart from the core death benefit, term insurance riders offer below-given additional benefits:

  • Accidental Death Rider When a person suffers from a terminal illness, his/her family ends up spending a significant amount in treatment and medical expenses. Accelerated death rider pays a part of the sum insured in advance to cover such costs and save the family from running out of cash.
  • Accidental Disability Rider If the policyholder can't pay the premium because of an accident or permanent disability, a sudden disability this pays the premium on behalf of the policyholder till completion of policy term or for a defined duration.
  • Critical Illness Rider If the insured person gets a heart attack, cancer, or any other critical illness, this rider pays a lump sum on valid diagnosis.
  • Premium Waiver Rider If the policyholder is unable to make payments due to income loss or disability, a premium waiver rider waives off all future premium payments. And the term policy remains active until the expiration date.
  • Income Rider: The rider ensures that your family receives regular income + sum insured in case of unfortunate demise of life insured.

Anyone can go for life insurance as it offers some savings after the maturity date, but it doesn't cover the protection of your family . The best term insurance plan is solely designed for taking care of loved ones if something happens to you. Term plans act as a shield between your family and sudden financial fall. They make sure that your family lives a healthy life even after you. With a little amount paid per year, you can be worry-free from the family's financial conditions.

Questions that you need to Ask while Buying a Term Insurance?

  1. 1. Amount of premium you have to pay based on your age, habits, education, and monthly income
  2. 2. The total number of benefits covered in the term plan. Do they include benefits that you care about the most?
  3. 3. How to save money on tax if you pay for the term plan?
  4. 4. Do they offer regular income options?
  5. 5. Can you change the coverage and premium in the future?
  6. 6. Does the claim consider valid if death occurs outside India?
  7. 7. Which kind of death is not covered by insurance?
  8. 8. Can NRIs take term insurance? If yes, what are the conditions?
  9. 9. Does the term insurance plan have a cash value if you decide to cancel the policy?
  10. 10. Under what circumstances can a term insurance plan be cancelled?
  11. 11. Can I pay the premiums online or make electronic payments?
  12. 12. What will happen to the term plan if the life assured starts smoking after purchasing the policy?
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