Monday, September 26

All About Group Term Life Insurance in India

Group term life insurance (GTL) is a customized life term insurance that an employer avails for his employees and their families. It is now an essential component of the benefits offered to employees by a company. Employees are the most prized assets of a company. Hence, covering their interests is pivotal in appreciating and caring for them. Health insurance or GTL can be a great way to motivate your employees and foster a healthy environment within your company.

What is Group Term Life Insurance?

GTL is customized insurance coverage that offers death benefits (lump sum or equated amounts) to the covered family members of the insured. This guarantees financial compensation for the employee’s wife, children, and parents (dependents) in case of the employee’s natural or accidental death during active employment.

This lends support and secures the dependents’ future if and when any such untoward circumstance materializes where the sole breadwinner is deceased. A GTL plan can be tailored according to the requirements of the employee and employer. For example, it can be extended to cover certain diseases, disability benefits, maternity benefits, and other diverse benefits.

Who Can Avail GTL Insurance in India?

All the employees within an organization, irrespective of hierarchy, are entitled to a group term life insurance. In India, the following organizations can offer GTL plans to their employees:

  • Employer–employee institutions
  • Informal non-employer–employee groups
  • Banks
  • Microfinance organizations
  • Non-banking financial organizations
  • Professional groups

A GTL plan can be awarded to employees within the age range of 18 to 69 years.

Features of GTL Insurance

  • Master Contract: A GTL plan is an umbrella scheme that covers all employees. You can add or subtract from this umbrella plan as employees come and go.
  • Premium: A GTL plan is purchased by a company for its employees, so the employer pays the premium on the group term insurance. However, sometimes, employees might have to make contributions when availing additional services beyond the basic scheme.
  • Monetary Guarantee: A GTL promises financial compensation and other death benefits for an employee’s family after his demise.
  • No Report Needed: Any new employee is covered under a GTL plan, and there is no need to submit medical reports for this term insurance.
  • Cost-effective: A GTL plan is cheaper than individual life term insurance.
  • Customizations: You can opt for additional riders such as critical illness, disability, accidents, etc.

Plum Insurance offers GTL plans at affordable costs, which are customizable according to the needs of the employer and the insured. Moreover, Plum Insurance cares for employees and their families. Hence, they have simplified the entire process of group life insurance, with features like 100% digitized claims, file claims on WhatsApp, annual check-ups, unlimited doctor consultations, discounts on medicines, etc.

Benefits of GTL Plans

For Employees:

The following are the benefits of a GTL plan for an employee:

  • Financial coverage: It offers financial security to the employee’s dependents in the unfortunate event of his death.
  • Tax Benefits: The benefits from a GTL insurance are exempt from any tax under Section 10(10D) of the Income Tax Act of 1961.
  • No Medical Reports Required: There is no need for prior medical check-ups to avail this insurance.
  • Prerequisite: It comes within the benefit packages when someone joins a company.
  • Addition of Riders: An employee can ask for additional riders on the base plan depending on their needs, like accidents or day-care benefits.

For Employers:

The following are the benefits for the employer:

  • Hassle-Free: An employer can manage the life insurance of the entire organization under a single plan. You can add or remove members from the scheme as new employees join the company or if veteran employees resign.
  • Cost-effective: This plan offers great benefits at an affordable premium.
  • Gratuity: Since the premium for this insurance is generally low-cost, employers can save quite a bit with GTL plans. Employers can subsequently use the savings to provide gratuity benefits to the employees.
  • Tax Benefits: The employer can avail tax benefits on the premium paid for the insurance under Section 37 of the Income Tax Act of 1961.
  • Show Support: It is also a great way to support family members during such tormenting and sorrowful circumstances.
  • Build Relationships: Offering a GTL plan to your employees will go a long way toward establishing meaningful relations with employees. They will feel appreciated and cared for.

Is GTL Insurance Enough?

A fundamental rule to note is that the GTL policy and its benefits are deemed invalid once an employee switches the company or retires. In such a scenario, having only a GTL plan can be disastrous. Therefore, it would be best if an employee also opts for an individual life term insurance policy to support their near and dear ones in the unpleasant event of his death.

The Bottomline

group term life insurance provides financial assistance to an employee’s family members in case of his death by offering substantial pay-outs. The dependents can use this amount as a substitute for the salary. This ensures that the unfortunate family can move on without worrying about money or the lack thereof. In addition, GTL insurance offers mental peace to the employees who can work dedicatedly and go about their lives without worrying about their family members’ security.

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