A group term life insurance falls under the category of a corporate insurance policy. Most businesses and organizations offer insurance coverage as a part of their employee benefit programs. A term life insurance helps support the nominee of the insurance holder in case of sudden demise financially. The nominee gets the sum assured, and there is no maturity benefit for this insurance scheme.
An overview for Group term life insurance
A group term insurance is offered by the employer of a business or organization to the employees in the firm. The employer pays for the expenses of the premium and other charges related to the insurance policy. The insurance holder can enjoy the coverage tenure till the last day of their service.
If the insurance holder meets with an unfortunate death during the service tenure, the registered nominee gets the assured sum. It is an effective way to support the family members of the demised employee. The premium fees are paid by the employer of the organization and the employee can enjoy the coverage benefit of the insurance throughout their service tenure.
Understand the different types of Group term life insurance
There can be multiple features in a group term life insurance plan. It depends on the employer (the buyer of the policy) to decide the type of insurance. Some insurance plan offers similar and uniform coverage (death benefit) to every member in the group. The group can be a formal group or an informal one. Organizations and businesses fall under the category of formal groups where the relation between the buyer and insurance holder is employer-employee.
There can be other features in a group term life insurance plan, covering accidental benefits, disability benefits, critical ailment coverage and many more. It depends on the employer whether they want to select a comprehensive plan for the employees. The fundamental policy only offers death coverage, which is mostly picked by startups and small businesses.
Key features you must note.
Besides evaluating the coverage features and term insurance expenses, you must note the eligibility norms. As an employer, you need to keep a clear overview of the eligibility aspects before purchasing the policy. Check if the employees will get benefited through the group life term insurance policy before purchasing it.
- Insurance coverage aspects – Evaluate in-depth.
The coverage and insured sum differ with the different insurance plans. The coverage amount that most small businesses and startup owners choose for their employees is around INR 5 lac. Some businesses purchase the policy with the sum insured linked to the salary. You can review the overall expense and compare the coverage amount to decide. Also, check if the insurer offers more than the death benefits in the insurance scheme. This way, you can obtain more insurance benefits under a compact price package.
- Is the coverage sufficient for your requirements?
After you have checked the coverage and offerings of the group term insurance plan, check if it matches the requirement. If you cannot manage the expenses or your employees need more coverage, go for other options available in the market. Additionally, you can connect to an insurance broker to help you with the best plans that match your requirements.
- What about the premium charges and expenses?
Small business owners and startups often struggle to manage the expenses to offer employee benefits. The best way to make a pocket-friendly choice in purchasing group term insurance is by taking sufficient time to review the expenses. Check the prices offered by the leading insurance companies. You can seek guidance from any insurance broker to help you find a budget-friendly group term insurance scheme that does not compromise on the coverage needs.
- Is it under your budget and best-priced in the market?
It is essential to find a term life insurance plan that satisfies the budget and stands out as the best scheme in the market. You have to find the best-priced insurance plan to ensure the best coverage sum for your employees.
- Tax benefits for businesses
Group term life insurance help in cutting your tax expenses for the business. Companies and businesses can reduce their tax amount by producing term insurance purchase papers. Under section 80C, the startup owner or business employer can avail of tax deductions by producing valid certifications of premium payment. In fact, the employer can get a deduction of up to Rs. 1.5 lacs by producing the premium payment certifications under the income tax regulation.
Understand the benefits of the insurance before purchasing
Are you thinking of buying the group term life insurance policy for your employees? The benefits will help your organization in the long run. An employee benefit like a group term life insurance is essential and effective for both employer and the employee.
- Increase employee retention rate in the company by offering such benefits.
- Get tax deduction in the annual income tax submission amount by purchasing the policy for your employees.
- Reduce the company expense by choosing an insurance plan that is easy on the budget.
Steps you need to take to buy the insurance –
- Step-one – Determine the coverage needs and budget: The budget varies depending on the company’s performance and profit generation capacity. So, it is an individual choice as you have to manage the expenses within the budget. Calculate first and purchase the right policy.
- Step-two – Compare the leading insurance offers: After you have determined the budget, comparing the offerings and expenditure of the leading insurance plans is necessary to make a prudent call. Take sufficient time to review the offers and the credibility of the insurer.
- Step-three – Connect to an insurance broker or seller: An insurance broker can help you all through by bringing the best plans that suit your needs. If you have already decided on the insurer, you can also directly connect to the company and buy the policy.
Closing note – The right insurer matters the most.
Find an insurer that exhibits the highest claim settlement ratio for the insurance holders. It helps you stay stress-free about the offerings and ensures a hassle-free service from their end. You can also connect to a reputed insurance broker like PlanCover to resolve all the doubts you have. PlanCover brings you the best insurance plans for small to mid-sized companies based on your requirements and budget.