Given the fragility of people’s lives in the modern environment, insurance policies are imperative. Businesses that want to make better decisions for their workers engage in policies that will care for their workers and their family members when they go through a financially hard situation. One such option is a group term insurance plan. Group insurance policies, which the company pays, are affordable and widely used by India’s major large-scale enterprises.
These plans are a convenient method to obtain insurance benefits at a low cost. They cover not only the employee but also their family members, including their wife, kids, and elderly parents.
Group life insurance policies provide ongoing protection and assurance against life’s biggest typical and unavoidable occurrences, such as mortality, partial or total sickness, disability, accident, severe disease, or even cancer. The plans serve as a shield for the people who they cover.
What is Group Insurance?
A group insurance policy covers a specific group of people. The organization provides group insurance coverage to its groupmates as part of its benefits package. For example:
- Members of a Club
- Professional association
- Co-operative societies
- workers of a corporation or organization
These are some examples. In addition to business owners, members of
- Employee welfare associations
- Residents of society
- professional associations
- Credit/debit cardholders of a single provider
- Customers of a specific bank/lender
- medical professionals
- and others engage in group life insurance plans.
The main advantage of going with a group plan is that it is considerably less costly than the personal life insurance policy. The employer or an organization is usually the proprietor of a group insurance plan. The coverage benefits of the policy are available to all employees or participants of that organization. Group insurance contracts made for 41% of India’s total insurance industry in 2014. Although most businesses offer group insurance policies to their employees, few are conscious of these plans’ various types and benefits. In this blog, we will look at the most prevalent forms of group plans in India and their types.
Types of Groups
Before digging into the various kinds of group insurance plans in India, it’s critical to know the various types of organizations that may benefit from group insurance policies. There are two types of groups in India: official groups and informal organizations. The particulars of both types of groups are described below.
Formal groups are those in which all of the members operate for a single company or group proprietor. It is also called the employee-employer group and includes businesses, business organizations, professional organizations, and so on. The insurance is acquired by the employer in this sort of organization.
Informal groups are those in which all members do not operate for a single employer. The insurance coverage in such organizations, also known as non-employee-employer organizations, is obtained on behalf of all participants by the group operator. This sort of group comprises participants of the same society, cultural organizations, and credit card, users.
Classification of Group Insurance Plans:
As earlier mentioned, many types of group insurance policies are available in India, spanning from health coverage to life insurance coverage. Group insurance policies are classified as either non-contributory or contributory. Below is a comprehensive description of both kinds of group insurance coverage.
Non-contributory: Members of the group or employees are not needed to pay premium payments to get insurance coverage under this type of group insurance policy. A non-contributory group insurance policy, for instance, is one where the business owner pays the insurance premium for the worker.
Contributory: It is a type of group insurance policy in which individuals pay a premium in order to obtain the benefits of the insurance coverage. Some employers, for instance, may deduct a portion of a business owner’s insurance cost from their salary.
A single agreement provides group life insurance to a whole group of individuals. The insurer is the employer or an organization such as a labor union, and the group insurance covers the employees or group members. This type of insurance is typically provided as part of a worker benefits plan, with the business owner bearing the expense. There are three forms of group life insurance:
- Group term life
- Variable group universal life
- Group universal life
Group Life Insurance Plans in India
Group Term Life Insurance Policy
It is a long-term strategy that is accessible to all participants of a certain organization. It works the same manner as a personal term life policy. Following are the most important features of group term life insurance:
- Low premiums
- Death Benefit
- No maturity value
- Disability benefits
Group Unit Linked Insurance Plans/ULIPs
Individual ULIPs are analogous to Group Unit Linked Insurance Plans (GULP), commonly known as Group Gratuity Plans. These programs offer coverage as well as investment opportunities. A percentage of the premium payment is set away for a life insurance plan, while the rest is invested in equities. Members in this scheme can invest in the premium payments through a range of stocks and debt-based exchange-traded funds (ETFs).
The amount of money invested grows over time. Generally, most firms enable staff to take the corpus when they resign or leave their positions.
Group Pension Plans
Businesses offer group pension schemes to assist staff in saving for retirement. It is seen as a feasible option to other well-known retirement investment plans like the EPF and NPS. The funds invested in these plans grow over time, enabling workers to leave with a substantial corpus.
Group Personal Accident Insurance
It is the same as having private personal accident coverage. The only distinction is that it is readily accessible to a group of people. Most organizations, credit card firms, and banks offer group personal accident coverage to their workers and customers. The coverage provided by this plan includes the costs of unintentional incidents that result in hospitalization, partial or permanent disability, or death. The term plan is distinct from the accident insurance policy in that it only pays out in the event of the insured’s death. Personal accident coverage, on the other hand, compensates the policyholder for a sudden loss of earning capacity as well as hospital expenses.
Group Employee Deposit Linked Insurance (EDLI)
This insurance policy is part of the EPF. The perks of these schemes are decided by the worker’s PPF payment. The EPFO currently gives disability/death payouts of up to Rs. 6 lakhs to workers covered by this policy.
While having a group insurance plan is good, it is also important to have some personal insurance coverage. The latter gives you a lot of flexibility and removes the requirement to depend on a specific membership for your coverage needs. Keeping a balance of both forms of coverage will guarantee that you receive the greatest possible security.