A group life insurance policy is provided by employers, business groups, banks, and housing societies to help their employees, clients, and members.

The employer retains the policy contract and the insured employees receive a certificate of insurance coverage. On policy termination, the policyholder will need to present this certificate to the concerned insurance company.

Breaking it Down Further

1. Low Price - Employees have to pay a very low cost, sometimes no cost at all, to avail a group life insurance policy. Usually, the employer pays the premium as a welfare measure for its employees.

When home loan providers or credit card companies provide group life insurance to their customers, the policyholders have to pay a premium but it is comparatively lower than that of an individual coverage.

1. No Pre-Medical Tests Required - In most cases, a pre-medical check-up is not required for availing group life coverage. It can be a big advantage if a person is not able to avail a personal cover due to certain lifestyle habits and pre-existing health conditions. An individual life insurance plan in such situation will mean paying an exorbitant premium.
2. Easy Claim Process - In a group life insurance policy, the claim process is quite simple. The employees are automatically covered by a group life indemnity policy issued by their employer.

The employee only needs to accept the life insurance policy from the employer and get the certificate of insurance to make the claim in future.

1. Tax Saving - Both individual and group life insurance policies provide tax exemption benefits. In group life insurance, the employer purchases the group policy on behalf of the employees, therefore, the tax benefits will be provided to the employer in a group life plan.

How does a Group Life Insurance Plan work?

• Usually, a group life insurance plan is more like a term plan. It implies that a fixed amount of sum assured or a life cover is provided in case the policyholder dies during the policy term. The sum assured is not refunded on the maturity of the policy.
• A beneficiary can be nominated from the family who will get the sum assured in case of the policyholder’s death.
• The sum assured is based on the individual’s salary package and varies from one company to another. To increase the sum assured, one will have to pay some extra premium.

How Long is a Group Life Insurance Policy Applicable for?

The coverage is provided as long as a person is a part of that organization. When they resign or retire from that organization, they will have the option to convert the group life insurance plan into an individual plan.

To do so, the certificate of coverage given by the employer must be presented to the insurance provider.