What are the advantages of group life insurance policies?

Written by : Knowledge Center

2022-11-25

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Group life insurance policies are generally opted by professional associations, business groups, banks, and housing societies. Essentially, a group life insurance plan provides life insurance coverage benefits to a large number of people, regardless of their age, occupation, gender, and socioeconomic status. Simultaneously, the premium amount payable under a group plan is significantly lower than that for various individual life insurance plans purchased for the same number of people.

Advantage of Having a Group Life Insurance Plan

In today’s day and age, group life insurance plans have become a preferred form of life insurance protection for employees and employers alike. A group life insurance plan can provide term insurance coverage, annuity benefits, health insurance protection, and liability protection. Here are different advantages of having a group life insurance policy

Also Read - Group Term Life Insurance

For employees

1. Default Low-Cost Cover

Group life insurance plans provide affordable insurance cover to each member covered in the group. Compared to having individual life insurance plans, group life insurance policy is cost-effective and provides a default life cover to the employees, often as an incentive.

2. No Pre-requisites

In individual life insurance policies, the insurance company considers several factors, including lifestyle habits and medical history, before issuing it. On the other hand, there are no pre-requisites to purchase a group life insurance plan. For example, there is no pre-requisite for having a pre-medical screening in case of group plans (for up to a specific cover limit)

3. Hassle-free Claim Settlement Process

The claim settlement process for a group life insurance policy is usually quick and straightforward. The employee or their beneficiaries only have to submit the required documentation to initiate the claim settlement process.

For Employers

1. Low Premiums

Generally, the premiums payable under a group life insurance policy are paid by the employers. Instead of purchasing individual life insurance plans, employers can significantly lower their expenses by opting for group insurance plans to cover the same number of employees.

2. High Employee Retention

Having the protection of a group life insurance policy as incentives, employers can reduce the employee attrition rate while increasing employee retention and boosting loyalty.

3. High Morale Among Employees

The security and peace of mind provided under a group life insurance policy helps keep employees stress-free and enables them to focus on the essential tasks at hand.

4. Tax Benefits

The premiums paid towards group life insurance policies are tax-deductible under relevant sections of the income tax laws in India.

Features of Group Insurance

Here are some of the key features of group insurance.

As risk spreads over a large number of people, a group insurance plan provides standardized coverage at competitive premium rates. This means that the coverage is the same for all members of a group.
Irrespective of the size of the group, group insurance covers all members under the same plan. The plan may be in the form of group life insurance, group health insurance, group travel insurance or group personal accident insurance.
A group can comprise employer and employees or non-employer and employees such as holders of a credit card or members of a social or cultural association.
The manager of the group gets a master policy in the name of the group.
Premium is charged to the members or can be paid by the group.
A member is covered as long as he is a part of the group. The cover ceases if a member leaves the group.

Group insurance plans by Canara HSBC Life Insurance are a smart choice for employers and associations operating in different sectors. These plans secure financial needs of group members and help employers meet their employee benefit payouts in an effective manner.

Benefits of Group Insurance

Buying a group insurance plan can be rewarding for individual group members such as employees as well as employers. Today, many companies and businesses prefer to cover their employees with group insurance as part of the overall compensation. Here are the key advantages of a group insurance plan for employers and employees.

The premium paid in group insurance is lower than the premium in an individual policy for a member. These plans reduce the liability of the insurance provider as the risk is spread across all members of the group.
As premiums are often paid by the employer, group insurance offers a convenient way to cover all employees with different income brackets. These plans provide a cost-effective means for employers to provide an insurance cover for their employees.
Group insurance helps enhance loyalty of employees for the employer. A group member feels valued to be a part of the group and is likely to continue his association with the group for a long period. In addition, these plans help employers create an employee-friendly workplace and positive work environment.
Often, a group insurance plan covers family members of group members. For example, many group health insurance plans cover spouses, dependent children and parents of the group member.
Group members can claim tax benefits on the premium paid on group insurance while filing their income tax returns. Employers can also claim tax benefits for paying premiums on insurance plans for their employees.
Group insurance provides standardised coverage for all members. It helps people of lower income groups to get the same coverage as those with higher income groups.
Some group insurance plans can be converted into individual plans when a member leaves a group. In such a case, the member has to pay a conversion fee.
Group members are not required to fulfil pre-requisite conditions. On the other hand, individual insurance plans often require the policy applicant to undergo a health check-up.
Must Read - Group Term Life Insurance

Eligibility criteria

Here are the eligibility requirements for a group insurance plan.

The minimum number of group members can vary in different types of group insurance plans. Some plans may require a group strength of at least 10 members. Others may require 50 members in a group to be eligible for group insurance.
The minimum age for entry is 18 years.
The maximum age may vary. Some plans have a maximum age limit of 60 years while some allow entry till 80 years.
All members must be active and full-time members of the group.

Conclusion: Group insurance offers a smart and convenient option to cover all members of a group under the same plan. Such a plan offers several benefits to individual members as well as the group as a whole.

The Group Advantage Term Plan by Canara HSBC Life Insurance is a non-linked one-year term plan for non-employer employee groups. This plan provides life cover to group members and secures their family against uncertainties of life. In this plan, you can opt for a fixed sum assured or a linearly reducing one. It also provides flexibility to modify the benefit and coverage.

What Is Group Insurance And How Does It Work

What is a group life insurance policy?

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