Wonderful benefits of group insurance policy
As the name suggests, the group insurance policies are designed to provide insurance cover to groups of people which includes, employers-employees, co-workers, professionals, cooperative societies and certain weaker sections of society.
February 27, 2019 / 01:03 PM IST
As the name suggests, the group insurance policies are designed to provide insurance cover to groups of people which includes, employers-employees, co-workers, professionals, cooperative societies and certain weaker sections of society. The main objective is to provide cover at lower premiums to those segments that may not be able to afford individual policies. Most of the insurance companies in India have come out with group insurance policies that can be customized to meet specific requirements of the varied group that they are targeted at. The advantage of these group insurance policies are available to people irrespective of their age, gender, socio economic background as well as profession as long as they belong to the group that is applying for the group insurance.
Objectives of Group Insurance Policies
There are different types of objectives for which these group insurance plans are designed but most of them cover the basic functions enlisted below:
- Gratuity: Any employee completing more than 5 years of service in an organization becomes eligible for the gratuity. The group insurance plans provide investment options to the organization in order to create a corpus that can be used to pay gratuity to the eligible employees.
- Annuity: Superannuation schemes of group insurance provide for retirement plans that can be availed by the employees by accumulating premiums over their period of service which provided to them at the existing NAV at the time of retirement as pension.
- Term Insurance: Such group insurance plans pay the sum assured to the next of kin of any of the members in case of his untimely death during the insurance term.
- Savings Tools: The group insurance policy also has additional elements of savings which can be used to create wealth over a long term while retaining insurance cover.
- Protection of Credit: Such group insurance plans have the provisions of tie up with banks to provide for any outstanding dues or loans of the member after his death or disability.
Benefits of the Group Insurance Schemes
There are a host of wonderful benefits associated with the group insurance schemes on offer by the various insurance companies in the market currently.
- Insurance Cover: Most of the group insurance plans prevalent in India provide automatic insurance cover for life of all members of the group or organization as long as they remain a part of it. This works great for those segments who cannot afford individual life cover through separate policies. The cover provided in such cases is merely a basic amount and the individual member must take other policies after retirement or when leaving the group.
- Low Premium Cost: As compared to any of the individual plans the premium for the group insurance schemes are much lower. However the premium depend on various factors such as professional hazards, average age group etc. Currently the One Year Renewable Group Term Assurance Plan of LIC offers the lowest premiums on every lakh of cover provided. This scheme requires annual renewal.
- Ease of Payment: Since the premiums are deducted from the salary of the employees there is no additional hassle of payment or missing the payment due date.
- Advantage to the Employer: The employer require a minimum of 25 members to initiate such a group insurance scheme in their organization and all payment made by the employer towards the contribution for group insurance of employees is considered as business expense and not calculated as profits for the purpose of taxation. This amount is limited to maximum of annual contribution up to 8.33% of salary bills of each individual employee. Such schemes also have the additional benefits of raising employee morale substantially.
- Advantage to Employee: This is a win-win situation for both sides as such plans by their vary nature enhance trust and loyalty and thus work as retention plans since not is the employee is looked after through the plans but also the welfare of his family catered for through group insurance. Even members of a non professional group when taking such schemes can avail tax benefits equally applicable to all members. The Sarva Shakti Suraksha of Bajaj Allianz is one such plan.
- Professional Asset management: In group insurance schemes that cater for gratuity and annuity the assets can be managed by the more experienced and professional experts of the insurance company thus providing greater returns for the employees being covered.
- Rider Options: With a minimal additional payment, the employees can avail the benefits of various kinds of optional riders such as double accident benefit offered by LIC and other riders such as critical illness or loss of employment offered by most of the private insurance companies in India.
|HDFC-Group Term Insurance Plan||Uniform||1 Year (Renewable)||EDLI||-Accidental Death Benefit|
|(Employee’s Deposit Linked Insurance Scheme )||-Total Permanent Disability|
|LIC- One Year Renewable Group term assurance plan (OYRGTA)||Uniform||1 Year (Renewable)||EDLI||-Double Accident Benefit|
|-Critical Illness Benefit|
|-Disability benefit |
|Reliance- Group Term Insurance Plan||Can be enhanced through higher premiums||1 Year (Renewable)||EDLI||-Double Accident Benefit |
|ICICI- Group Term Insurance plan||Fixed as per rank and seniority in organization||1 Year (Renewable)||EDLI||-Accident and Disability Benefit Rider |
|-Critical Illness cover|
Most of the group insurance schemes available in the market today are covered under the Employee Provident Fund Organization (EPFO) which mandates the employers to provide insurance to the employees under the Employee's Provident Fund and Miscellaneous Provision Act, 1952. Thus considering the option of taking a group insurance scheme will accord a world of benefits to both the employers as well as the employees.
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