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Group Term Insurance Plan and Its Benefits

dateKnowledge Centre Team dateApril 08, 2021 views231 Views
Group Term Insurance Plan and Its Benefits

Today, a lot of companies are actively working towards securing their employee’s future and interest through many initiatives. From group activities to boost morale to offering fringe benefits for the employees, organizations are looking out for their employees. One such benefit that most of the companies offer nowadays is a group insurance.

Group life insurance is a type of life insurance where one contract covers the whole group of people. Typically, a policy owner is an employer or business similar to a trade union and the policy includes employees or team members. Group term insurance is often provided as part of a comprehensive employee benefits package.

In most cases, the cost of getting such a plan is much lower than what employees or members will pay for the same amount of protection per unit. So, if you are offered a group term insurance plan by your employer or another party, you should take it out, especially if you do not have any other life insurance or if your coverage is insufficient.

What is Term Life Insurance?

A term life insurance plan is one of the common forms of group life insurance. It is usually provided in the form of annual renewable insurance. When a group insurance plan is provided by your employer, the employer usually pays most (and in some cases all) premiums. The amount of your cover equals one or two fines in your annual salary.

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How Group Term Life Insurance Works?

Group life insurance policies are generally written as temporary insurance and are provided to employees who meet eligibility requirements, such as permanent employment or 30 days after employment. The availability of these term plans can be adjusted by appropriate life events or during open registration.

The average amount of coverage is usually equal to the annual salary of the combined work. Employers often pay most or all of the basic availability premiums. The additional value, usually multiplied by the employee's annual salary, is usually provided with an additional premium paid to the employee.

Benefits of Group Term Life Insurance to Employees

1. Automatic insurance cover

A group term insurance policy provides insurance coverage to members simply by being part of a group. It guarantees basic insurance to pay for those who do not have personal health insurance.

2. Gratuity

Employers are assisted in a structured way to build their future debt to pay employees. Group insurance policy help employers alike as well as provide employees with life insurance with greater freedom.

3. Tax benefits

Group term life insurance programs offer tax benefits to both employers and employees. As a general Tax Act, death benefits are tax-exempt under Section 10 (10D) of the Income Tax Act, 1961. In addition, group insurance schemes apply twice - for employee welfare and retention.

4. Customize to meet staff needs

The integration of group-term plans can be expanded with additions such as an education grant, a repatriation grant, accidental death and more, combining a number of benefits and basic coverage.

5. No medical examination

Employees are free from the problem of going for medical examinations under the group term insurance plans.

6. Cost-effective

Since the group plan includes insurance coverage for most people, its premium is much lower compared to individual policies.

There is no doubt that a group insurance plan is a clever way to find insurance coverage for a wide range of risk factors, let alone health. Start by exploring the appropriate group plan.

Benefits of Group Term Life Insurance to Employers

  • Group term insurance policies are as helpful to employers as they are to employees.
  • Employers are helped to fund their free funds easily under group insurance policies. Free payments are built on strategies to achieve the next payment, reducing the burden on the employer.
  • Refunds will be made based on the performance of the funds selected by the customer.
  • Group term life insurance plans in India are very economical because strategic management of the group is cheap.
  • Better-performing investments will receive higher profits and reduce costs for the employer.
  • Some programs provide employers with both life insurance covers and free benefits.

Group Term Insurance Benefits for an Informal Group

  • Paying members' premiums

    With this program, you can choose to offer members of your group life cover by paying their premiums. Alternatively, members of your group can pay their own premiums while enjoying the lowest premium rates for the group program.

    A person who pays a premium (either you or your members) may receive tax benefits in accordance with existing Income Tax laws.

    * Tax laws are subject to periodic amendments.

  • Benefits during an incident

    Team members using the program receive a life cover benefit at a lower cost. In the event of a tragic incident, the program provides a number of death benefits to the nominee. This amount can protect you from debts such as loans taken by members.

Group Life Insurance Requirements

Normally, all employees are automatically enrolled in the base coverage when they meet the eligibility requirements. Requirements vary and may include working a certain number of hours per week or part-time as an employee. Availability of the coverage of group-term plans varies.

In some programs, registration is only available when a person starts working or at a relevant health event, such as the birth of a child. For some plans, additional coverage can be added during open subscription times.

Enhancing the plan by adding riders or benefits may require writing. Usually, it is a simple and easy-to-write process where the insured individual ascertains his or her eligibility rather than going for a physical examination. The employer can then decide whether to offer additional coverage or not.

Group term life insurance plans allow you to receive all the benefits of each program under the same contract. They also offer tax benefits and lower premiums due to the presence of the group. Therefore, they are quite a popular option, and Canara HSBC Oriental Bank of Commerce Life Insurance offers plenty of group-term plans for employers to choose from for their company.

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Frequently Asked Questions (FAQs) for Term Insurance

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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