avail group term life insurance

Most companies offer group term life insurance coverage to their employees that ensures financial security of an employee’s family even after his demise. It is aimed to provide monetary benefits to the designated beneficiary covered under the plan in the event of the insured’s death. It also functions as a tool of employee retention in large organizations.

Who is eligible to avail group term life insurance?

Group term life insurance is offered to several categories of working class such as Employee-employer groups, Non-employer – employee groups, banks, non-banking financial institutions, professional groups, and micro finance institutions. The term insurance eligibility criteria vary for each of these categories, subject to basic conditions of insurability. While some plans may offer basic and uniform coverage to all the members of the plan, others may offer a supplementary and graded coverage based on the professional ranking or position of the members included in the plan.

Features of Group Term Life Insurance Policies

These policies possess a host of attractive features that make them an ideal option to be crafted into employee benefit baskets. Here are some of those features:

  • Term insurance eligibility age: The minimum entry age is 18 years and the maximum ranges between 65-69 years.
  • Coverage: Many group term plans cover the basic salary, and any other compensation in the form of bonus, or reimbursement reported as income is excluded. As mentioned earlier, the coverage offered through a group term life insurance plan varies widely between employers. The amount of coverage may also depend on one’s position in the organizational hierarchy and the benefits for the top echelons of management are much higher in comparison with the lower echelons. On the other hand, some small and medium sized companies do provide a flat, uniform coverage to all its employees.
  • Premium Cost: Premiums contributions are made by the employer alone or shared with the employee from his salary during the employment service. The good news about the group term plans is that they are inexpensive when purchased at a young age. The eligible employees are by default covered under the group term plan, and premiums are based on that group of employees, irrespective of their health. Most plans have premium cost bands in which the cost of insurance rises incrementally as per age groups. The premiums for each premium cost band are generally mentioned in the plan document. So, a healthy employee in the group can offset the high premium costs for other employees who would otherwise be considered as uninsurable.
  • Tenure: The policy term for is usually one year. Thereafter, the policy needs to be renewed annually.
  • Portability: As overage is related to one’s current employment, the coverage automatically terminates upon exiting the current job. However, certain insurers provide the option of converting the group term life insurance policy to an individual permanent policy while shifting to a new job. This is a portable option that entail additional costs and higher premiums.
  • Tax Benefits: The death benefit payouts to the legal beneficiaries are tax exempted under section 10 (10D) of the Income Tax Act 1961.
The Bottom Line

Given that term insurance eligibility for group plans is dependent on a variety of factors such as age and professional ranking of a member, it is prudent to pick group plans that offer varied coverage options, instead of a standard single cover. One size does not fit all and choosing plans such as Future Generali Term Life Insurance plan provides life insurance cover to all its members with a choice of coverage options such as flat, graded, and salary multiple at lower premiums. The premiums are payable on an annual/semi-annual/quarterly/monthly basis and the plan guarantees a sum assured to the beneficiary on the death of a member covered under the plan. It allows the insured to add and delete members on a monthly basis, and the nominee can claim tax exemption on the death benefit payouts in the event of insured’s demise.