Group Life Insurance: Features & Benefits

 Having a life insurance plan can be very beneficial, as it ensures a form of financial security for your loved ones in your absence. A group life insurance policy provides such life coverage to multiple people under one plan. Such plans are opted for by organisations that want to offer the benefit of life coverage to all of their members. Group life insurance plans are usually opted for by corporate companies, banks, NGOs, microfinance institutes, and so on. By providing life insurance to all its members, an organisation ensures to a certain extent that they feel loyal to the company. It is also an effective strategy to retain employees and increase productivity. 


What is life insurance?

To understand what group life insurance is, we must first understand the workings of a regular life insurance policy. Signing up for a life insurance policy entails your loved ones receiving a pre-decided sum assured amount if an unfortunate event leads to you passing away. In return for this assurance, you have to pay a premium. Though there are many types of life insurance policies, including ULIPs, which have an investment element attached to them, a regular policy is quite simple to understand and buy. 


A regular policy covers a single individual only, while a group policy covers a large number of people. 


Features of group life insurance 


·       Managed by a master policyholder

The person assigned to manage the master group life insurance policy is called the master policyholder. It is this individual that decides what coverage the members will receive, and the sum assured for the plan. The master policyholder also decides whether all members of the organisation will receive the same coverage or whether it will differ as per the position of the member within the company. 


·       Premium deducted from salary

In a regular life insurance plan, the policyholder pays the premium via various payment modes. In a group plan, however, the premium is deducted from the salary of the employee. This deduction takes place as per the premium mode chosen by the master policyholder. The premium may differ from employee to employee, depending on their salary, age, the coverage they are receiving, whether they have chosen any riders, and so on. 


·       Premium determined by several factors 

Since a group plan covers multiple people, their numbers, collective age, and health are all considered when deciding the premium. If many people join an organisation in a year, it will result in a higher premium due to the increase in the number of people being covered. Similarly, the premium might reduce when multiple leave the organisation. 


·       Affordable coverage 

If you were to ask someone what the major benefit of group life insurance is, they would probably say affordability. Being a part of a group life insurance plan and receiving coverage is a much more affordable option than buying a separate plan for yourself. 


Benefits of group life insurance 


·       No need to manage the policy 

If you were to buy a policy for yourself, you would have to search for the right plan, research the coverage, undergo a medical test, and so on. This process gets eliminated when you opt-in for a group life insurance policy. All you have to do is sign a contract when you become a part of the organisation. What’s more, there are no chances of the policy lapsing due to missed premium payments since the premiums are automatically deducted from the salary. 


·       Additional premium paid by the employer 

In many cases, the policyholder is expected to pay only a certain portion of the premium. The other half is paid by the policyholder. This is very beneficial as it ensures you have adequate coverage while taking on only half the costs for the same. 


·       Option to choose additional coverage 

Even though you receive default coverage of the group plan, you can also opt for additional coverage in the form of riders just for yourself. Many group plans in the market allow for such options. You can opt for add-ons, such as the critical illness disability and the waiver of premium riders, at an extra cost. 

Though a group policy may be cost-effective, it should not come at the cost of financial security for your family. If you feel that the group plan does not provide sufficient coverage that you require, you can buy an individual life insurance policy to supplement it. 

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