Term insurance has become a popular financial tool for individuals. It is ideal for those looking to protect their families in the event of an unexpected demise. In India, many companies are offering group term insurance policies to their employees. This is typically done as part of their benefits package.

 

Group term life insurance helps enhance employee satisfaction. It also provides a crucial financial safety net for their families.

Understanding Group Term Life Insurance

A group term insurance is provided by employers to their employees. They also allow them to customise and add riders to their plans at minimal costs. The type of coverage offered depends upon the policy of the company. Usually, employees between the ages of 18 to 60 are eligible for the group term insurance policy.

 

Term insurance pays out a lump sum amount of money to the family/nominee of the insured employees. This is in case of their untimely death while the term policy is active. Here, the employee’s family becomes the beneficiary/nominee. The premiums are comparatively cheaper than individual term insurance policies.

Benefits of Group Term Insurance for Employees

Here are some advantages of group term insurance for employees:

  • Financial Coverage

It provides financial coverage to the employees’ beneficiaries. The policy may provide a sense of relief to employees. This could help them ensure that their families have enough coverage in case of their demise. 

  • Affordable Premiums

Group term insurance policies are typically paid by the employers entirely. Even in companies where part of the premiums are paid by the employees, the cost is very minimal.

  • Tax-free Death Benefit

As per Section 10(10D) of the Income Tax Act, 1961, funds received as the death benefit by the insured’s family or nominee are completely tax-free.

  • Additional Riders

Employers also provide the option to their employees to add extra riders. These include accidental death benefit, critical illness cover, and more. The add-ons are offered at reduced costs so that employees have all the coverages they need.

  • No Medical Tests

Under a group term life insurance policy, employees usually do not have to go through medical tests to be eligible for the term life insurance.

  • Add-on to Existing Insurance Coverage 

Employees can be assured about their family's financial safety in case of their death. It could boost the total coverage an employee has from their existing insurance plan.

Benefits of Group Term Insurance for Employers

Group term insurance has many benefits for employers as well. These include:

  • Cost-friendly Term Insurance

As companies tend to buy group term insurance in bulk for their employees, the cost of premiums can be significantly lower. This allows them to provide term insurance benefits to employees at reduced costs.

  • Attractive Employer-provided Benefit 

Term insurance is a major employee benefit that most employees can’t overlook. Providing group term insurance to employees shows the employer's value for their commitment.  

  • Tax Benefits

The firm can take advantage of tax exemptions on the premiums paid for group term insurance. This is under Section 37(1).

 

Group term insurance is a cost-efficient way for firms to offer term insurance to their staff. If you are looking to buy group term insurance, make sure to look at all available options. You can then choose a plan that gives you and the employees the best benefits.

 

For individual term insurances, you can take a look at all the available plans on Bajaj Markets. You can enjoy benefits like affordable coverage, easy online application, accidental cover, etc.

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