Group term life insurance plan is a type of term life insurance plan that is offered to a group of people. Group term life insurance plans are usually taken by the organisations for their employees as a part of the employee benefits. The group term life insurance plans can be taken by any organization depending as long as it satisfies the minimum number of life requirements. Group term life insurance covers the death and sometimes the disability of the employees due to an accident or natural death. Any unforeseen circumstances leading to the death of the employee would be covered under the policy. The major advantage of this policy is that it covers the death or Disability of the employees anywhere as well as in the course of their employment outside the workplace.
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The benefits of group term life insurance policy are mentioned below:-
- High coverage at low premium:The major Benefit of group term life insurance policy is the high coverage it provides at a low premium. The premium that is charged in the group term life insurance policy would be less when compared with the individual term life insurance policy. This is due to the fact that more people are covered under a single policy and the chance of occurrence of an event is less. The premiums under the group term life insurance policy are affordable and can be purchased even by the small organisations.
- No pre policy medical checkup: The other major Benefit of a group term life insurance policy is that there would be no pre policy medical checkup required for taking it. Anyone can purchase the group term life insurance policy without undergoing a pre-policy medical checkup. Since the number of members under the policy are large, it would not be feasible for the insurance company to ask all the members to undergo medical tests before policy issuance. The insurance company would not even ask for the health declaration from the members in most of the cases for the group term life insurance policy.
- Natural and Accidental death covered: The group term life insurance policy covers natural as well as accidental death. Any employee of the group term life insurance policy meeting with accidental and natural death would be compensated upto the sum assured mentioned under the policy.
- Tax Benefits: The major advantage of group term life insurance policy is the tax benefits it offers to both the employer and the employees. The company or the employer can avail tax exemptions for the premiums paid towards available group term life insurance under section 37(1) of the income tax act, 1961. The employees and their families can be benefitted from the group term life insurance policy as the proceedings from the death of the member of the group term life insurance policy are completely tax free as per the section 10(10D) of the income tax act.
- Add-ons: The employees can pay additional premium to avail the add-ons such as critical illness cover, personal accident cover etc.
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