What is a group life insurance policy?

Written by : Knowledge Center

2022-11-25

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In today’s day and age, group life insurance plans have become a central constituent of the benefit packages offered by employers to their employees. Essentially, a group life insurance policy refers to the life insurance coverage provided to a group of people, usually employees working in an organization. The primary purpose of the group life insurance policies is to provide financial independence and support to the concerned employee’s family in case of any emergencies. In case of the concerned employee’s demise while employed with the organization, the respective group insurance policy would provide the much-needed monetary guarantee to the grieving family.

Eligibility Criteria for Group Life Insurance Policies

Group life insurance policies can be purchased by –

Banks
Non-banking financial institutions
Employer-employee groups
Non-employer-employee groups
Microfinance institutions
Professional groups
Also Read - Group Term Life Insurance

Features of the Group Life Insurance Policies

A group life insurance policy essentially provides affordable and efficient life insurance protection to the employees working within an organization. Some of the impotant features of these group life insurance policies include –

1. Insurance Coverage for Large Group of People

a group life insurance policy provides life cover protection to multiple individuals under single or master contract policy. The insurance company does not have to go through the tedious process of filling out applications or conduct medical tests for each applicant. Instead, the employer becomes the applicant and also the master policyholder, thus choosing the policy benefits and completing the formalities of buying the group life insurance policy

2. Affordable Life Cover

Affordability is one of the significant features of group life insurance policies. Both the employers and the employees usually share the cost of availing of the life insurance benefit, making them highly affordable for all concerned individuals. As part of the premium contribution, the employer may decide to deduct a small part of its salary.

Also Visit - Online Term Plan

Working of a Group Life Insurance Policy

The working of group life insurance policy is described in the following flowchart –

A master group insurance policy is issued to a group administrator, after an initial payment of payment
The premium payment made initially covers all life insured members under the group life insurance policy for one year from the date of the commencement of the group policy
The premium payment made initially covers all life insured members under the group life insurance policy for one year from the date of the commencement of the group policy
The members of the group get an option to select the sum assured – either as a lump sum amount payout or be linked to a salary or loan account
The group life insurance policies are annually renewable
The premium payable under group life insurance policies is based on the differences in the age allocation and size of the concerned age group

Canara HSBC Life Insurance offers a variety of group life insurance plans that can help employers and affinity groups to maximize their employee benefit payouts effectively. At the same time, these plans help secure the life insurance and financial needs of their members.

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 are the advantages of group life insurance policies?

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