Group Insurance is a type of insurance that is specially designed to offer life insurance cover to a group of people under a single life insurance policy. There is a group of insurance plans available in the market for a group of family members or employees of a company or members of a particular professional group, customers of banks, NGOs, non-banking financial institutions, and microfinance institutions, etc.
What is Group Term Life Insurance?
Group Term life insurance policy is a type of life insurance policy that provides coverage to a group of people under a single policy. It is a contract between the insurance company and the Corporate Company in which the life insurance company promises to pay the claim in the event of death of any employee of the corporate company covered under the group term insurance policy. The premium for the group term insurance policy would be paid by the Employer but the claims would be paid to the nominee of the employee in case of death of the employee due to an insured peril.
Features of Group Term Life Insurance
The following are the features of group term insurance policy
- Age Limit: The minimum age to enter is 18 years and the maximum age is from 65 to 69 years
- Add-on covers: Add-on covers are provided as riders that insure for critical illnesses, accidental deaths, disabilities, etc.
- Term Policy: If employee dies in an accident, the group life insurance gives the total guaranteed Amount to the candidate selected by the deceased individual.
- Coverage: A pre decided sum assured is paid to the beneficiary of the insured in the event of death.
- Premium: Premium payments are made by the employer or in by the employee salary during his term. Premiums are low when brought at a young age.
- Policy Term: policy has one year limit. After that, it must be renewed every year.
- Number of Member: In group term insurance, the minimum size of the group is 50 members.
Group Term Life Insurance Benefits
According to group term life insurance meaning, it provides coverage to a group of people under single policy. It provides various benefits to the customers. The below are the some benefits of group life insurance policy.
Default Insurance Cover: It provides insurance cover to members simply by being part of the group. It provides basic insurance cover for those who do not have a personal life insurance policy.
Tax Benefits: These plans provide tax benefits to both employers and employees. According to prevailing Tax Laws death benefits are tax free under section 10(10D) of income tax Act, 1961.
Gratuity Funding: Employers are approved with a systematic method of building up funds for their potential gratuity liability towards the workers. A group insurance policy assists the employers and offers life insurance coverage to employees.
No medical check-ups: In this life insurance plans, Employees are no need to go for a medical check-up to get insured.
Low Cost: In group term insurance plans, the premium costs are much lower as compared to individual policies..
How Does a Group Term Life Insurance Work?
Group life insurance scheme works essentially the same as an individual term life policy:
- A group administrator is issued a master policy upon which he pays an initial premium.
- This initial payment covers all the members of the group participants for one year.
- Monthly or annual payments keep the policy active.
- The insurer pays a death benefit to a nominee of policyholder for most causes of death.
- An option to choose the sum assured is provided to group participants. This sum can either be a lump sum amount or could be connected to salary account or a loan account, etc.
- Once the policy holder has paid the premium, the members are covered for tenure of one year from the date of commencement of the policy.
- Policies expire after a certain period, so the group life insurance plans are annually renewable.
- The premium is charged based on the changes in the size of group and age allocation of the concerned age group.
Group Term Life Insurance Premium Calculator
The Group Term Life Insurance Premium Calculator can be used to know the premium of group term insurance policy. The factors affecting for this plans are age, gender, sum assured, lifestyle, occupation, etc. A group life insurance policy premium calculator tool provides the premium for your life insurance policy according to the data entered by you.
The group life insurance premiums are payable through the premium calculator which determine the Life insurance companies available on our website. The amount of premium is also calculated on a required basis, the group life insurance calculator helps you fight the risk of your lives with insurance coverage for death occurring at a given age level. The premium for the group life insurance policy would be paid by the Employer but the claims would be paid to the nominee of the employee in case of death of the employee due to an insured peril.
The best group term insurance plan in India can be found on the online portal while choosing the best term insurance plan is the one that offers the maximum coverage at affordable premiums and with all the possible add-ons. Some Group term plans offered by the insurance companies are HDFC group term insurance, ICICI Group Term Insurance, TATA AIA Group Term Insurance, Bajaj Allianz group term insurance plans, other companies offers the group term insurance plans.
Group Term Life Insurance Premium Table
Premiums for Group Term Insurance can vary significantly based on factors such as the age, gender, and size of the group. Here's a simplified example premium table for Group Term Insurance in India
| Age |
Coverage Amount |
Premium ( per annum per member) |
| 18 to 30 Years |
10 Lakhs |
500 |
| 30 to 40 Years |
10 Lakhs |
800 |
| 40 to 50 Years |
10 Lakhs |
1200 |
| 50 to 60 Years |
10 Lakhs |
1500 |
| 60 to 70 Years |
10 Lakhs |
1800 |
Please note that this is a simplified illustration, and actual premiums would depend on many variables.
Best Group Term Life Insurance Plans in India
The best group term life insurance plans are based on various factors including premium rates, coverage options, and customer service. It is essential to research and compare policies regularly to find the most suitable one for your group's needs.
Here is a list of some of the prominent insurance companies in India that offer Group Life Insurance plans.
- HDFC Life Insurance: HDFC Life is a well-known private insurance provider in India that offers a range of insurance products, including Group Term Insurance plans.
- Tata AIA Life Insurance: Tata AIA offers Group Term Insurance policies with options for customization to meet specific group requirements.
- ICICI Prudential Life Insurance: ICICI Prudential is a leading private insurance company in India that provides Group Life Insurance policies.
- SBI Life Insurance: SBI Life Insurance Company, a subsidiary of the State Bank of India, offers Group Term Insurance plans with flexible coverage options.
- Max Life Insurance: Max Life Insurance offers group insurance solutions, including Group Term Insurance, to cater to the needs of various organizations and groups.
- Bajaj Allianz Life Insurance: Bajaj Allianz is known for its diverse insurance offerings, and they provide Group Term Insurance plans to organizations.
- Reliance Nippon Life Insurance: Reliance Nippon Life Insurance provides group insurance solutions, including Group Term Insurance, to employers and organizations.
Who is Eligible for Group Term Life Insurance Policies?
Most businesses provide their workers or employees with group term insurance, which guarantees the financial protection of an employee's family even after policyholder’s death. Group term insurance policies are offered to the following groups of people:
- Employer-employee groups
- Non employer- employee groups
- Banks
- Non-banking financial institutions
- NGOs
- Professional groups
- Microfinance institutions
Group Term Life Insurance vs. Term Life Insurance
Here's a comparison table between Group Term Life Insurance and Individual Term Life Insurance in India:
| Aspect |
Group Term Life Insurance |
Individual Term Life Insurance |
| Coverage |
Provided to a group by an organization |
Purchased by an individual for personal coverage |
| Premium Payment |
Often paid by the sponsoring organization, can be lower due to group rates |
Paid by the policyholder, rates based on individual factors (age, health, coverage amount) |
| Coverage Amount |
Usually a fixed multiple of salary or a uniform amount for all members |
Chosen by the policyholder based on individual financial needs |
| Medical Underwriting |
Group members may not undergo detailed medical underwriting |
Typically involves medical underwriting, and rates can vary based on health |
| Customization |
Limited customization options compared to individual policies |
Offers extensive customization options to tailor coverage to individual requirements |
| Tax Benefits |
Premiums paid by the organization may be eligible for tax benefits |
Premiums paid by the policyholder are eligible for tax benefits under Section 80C and the death benefit under Section 10(10D) of the Income Tax Act, 1961 |
| Cost |
Lower premiums due to group rates |
Premiums may vary based on individual factors, potentially higher for older individuals or those with health issues |
| Suitability |
Suitable as a basic life insurance benefit provided by organizations |
Suitable for individuals seeking personal and customizable life insurance coverage |
FAQs – Group Term Life Insurance
What Does Group Term Life Insurance Mean?
Group Term Life Insurance is a type of life insurance policy provided by employers or organizations to a group of individuals, typically their employees or members. It offers life insurance coverage for all eligible members of the group under a single policy.
Is Group Term Life Insurance Taxable?
The death benefit paid out by a Group Term Insurance policy is generally tax-free under Section 10(10D) of the Income Tax Act in India. However, if the employer contributes to the premium, there may be tax implications for the employees based on the employer's contribution.
How Does Group Term Life Insurance Work?
In this policy, the sponsoring organization (employer or group) purchases the policy and pays the premiums. Coverage is extended to all eligible members of the group. In the event of an insured member's death, the policy pays a death benefit to the nominee designated by the insured member.
How to Calculate Group Term Life Insurance?
Group Term Insurance premiums are calculated based on factors such as the age, salary, and size of the group. The premium amount is typically paid by the sponsoring organization on behalf of its members.
Is Group Term Life Insurance Worth It?
Group Term Insurance can be a valuable benefit provided by organizations, as it offers financial protection to group members and their families. It is often cost-effective and can contribute to peace of mind, making it a worthwhile inclusion in employee benefits or group memberships.
What is the Difference between Group Term Life Insurance and Life Insurance?
Group Life Insurance is provided by organizations to a group of individuals, while individual Life Insurance is purchased by an individual for personal coverage. Individual policies offer more customization and portability, while group policies are often more cost-effective and tied to group membership.
What is the Maximum Age of Entry for a Group Term Insurance Plan?
The maximum age of entry for a Group Term Insurance plan can vary among insurance providers and specific policies. Generally, the maximum age of entry is around 60 to 70 years, but it depends on the terms and conditions of the policy.
What is the Tenure of a Group Term Life Insurance?
The tenure of a Group Life Insurance plan can also vary based on the sponsoring organization's choices and the policy's terms. Group policies are typically renewable on an annual basis or for longer terms, such as 1, 2, or 5 years, depending on the contract between the organization and the insurer.
Conclusion
Group Term Insurance in India offers financial security to members of an organization or group. It provides a cost-effective way to protect beneficiaries in the event of the insured's demise, with tax benefits available for premium payments. Though it may not offer the same level of customization as individual policies, Group Term Insurance provides a valuable benefit focused on enhancing the well-being and peace of mind of all group members.