Group Life Insurance Plan: An Overview
We know ‘Life is uncertain’, but ensuring your family is protected against unfortunate events helps you grind maximum happiness. To obtain the security of their workforce, employers buy group insurance policies after comparing options from the best life insurance companies. Almost all life insurance companies in India offer group life insurance plans. Let’s understand the concept of group life insurance in detail.
What is Group Life Insurance?
Group life is a type of life insurance plan that provides cover benefits to a group of people under a single contract irrespective of age, gender, health condition, economic status, and other factors. The group can include members of an association, club, co-operative society, NGOs, banks, companies, etc.
In an organization, the employer is the master policyholder of the group insurance plan, and all other employees are covered as beneficiaries. The employer pays the entire premium or the major premium regularly to attain continuous benefits. With a group life insurance plan, everyone gets the cover benefits against the same risk, such as life insurance, health insurance, accidental benefit insurance, etc. Generally, term insurance plans are offered for groups; hence, they are called group term insurance plans.
Why Do You Need a Group Life Insurance Plan?
The primary objective of a group life insurance plan is to ensure that the employees and their concerned dependents get the required support under one master contract in case of any emergencies. Besides providing employee benefits, there are primary concerns about why an employer needs a group life insurance policy.
The first and foremost objective of any organization is to create value for its customers. To achieve maximum value creation, the corporation and employee must work toward the same goal. This can be done when the employees are satisfied and they have a sense of security.
Group life insurance is a security measure that safeguards employees and their families against any uncertainties. When joining a workplace, employees prefer an organization that offers maximum security and benefits.
Employees choose to stay when they feel protected and get sufficient benefits when required. The company has a higher probability that its employees will stay for a longer period when they offer maximum protection.
The group life insurance policy keeps the employees stress-free while doing their jobs. Ultimately, increases focus and productivity towards work.
The group life insurance offers financial coverage even after the employees complete their employment tenure. This way, employees can ensure financial security after retirement.
The premium paid towards group life insurance falls under the employee benefit cost to the organization, i.e., business expenses. Hence, the employer can avail of tax benefits on the group life insurance plan.
Eligibility Criteria of Group Life Insurance Plan
The eligibility criteria for group life insurance may vary depending on the group insurance plan and the life insurance company you choose. Below are the primary eligibility criteria that you can consider before buying a group insurance plan.
To qualify and buy a group life insurance, there should be at least 10 individuals in the group.
The group members should have some common attributes, like working for the same employer, coming towards the same association, or having similar professions or interests.
The minimum age to be eligible to participate in a group insurance plan is 18, while the maximum age can vary, as mentioned in the group life insurance plan.
The life insurance companies perform underwriting of the group insurance policies to evaluate the risk involved.
Since the employer is the master policyholder, he/she is responsible for contributing the full or major premium of the policy. The secondary contribution is made by all the members insured under the group insurance plan.
Classification of Group Life Insurance Plan
Though the group life insurance is for employees, there is a higher chance that the employee pays the plan premium. Hence, the group life insurance can be classified into the following two major categories:
- Contributory Plans: In this type of group life plan, the group members/ employees pay the premium of the plan partially or fully to enjoy the insurance cover benefits.
- Non-Contributory Plans: In the non-contributory type of group life insurance plan, the group head or the employer pays the entire policy premium.
Types of Group Life Insurance Plans Available in India
Depending upon the requirements of the groups and organizations, the life insurance companies in India offer different types of group insurance plans. Each group life insurance plan has a different set of features. Some common types of group life insurance plans in India are mentioned below.
Group Term Life insurance
Group Term Life Insurance is the basic life insurance policy designed to offer life insurance benefits to a group of people, usually the employees of a company, for a limited duration. A group term life insurance provides financial assistance to the dependents of the covered employee.
Group Health Insurance
Group health insurance policy provides medical assistance to the group of people covered under the policy. These plans typically provide comprehensive group medical coverage, including prescribed drugs, tests, medical procedures, and other healthcare services.
Group Personal Accident Insurance
Group personal accident insurance covers the members of an organization against accidental death or disability. This policy shields the insured and the dependents from accident-related financial stress, including medical costs, income reduction, and other hassles.
Group Gratuity Insurance
Under group gratuity insurance, the employer provides a lump sum fund to the employee or beneficiaries at the time of retirement, resignation, or death. The payable amount under group gratuity insurance depends upon the length of service and salary of the employee.
Group Superannuation Insurance
Group superannuation insurance ensures that the employees receive a continuous stream of income even after their retirement. Both employees and employers contribute to the fund that the fund manager primarily manages.
Group Leave Encashment Plan
Group leave encashment plan is a scheme to fund the leaves of the employees. The leave encashment plans reduce the financial burden on the employer and help them fund the leave encashment liabilities payable to the employees.
Group Credit Term Plan
The bank or financial institution can offer group credit term plans to their borrowers. In case of the demise of the borrower, the policy helps the beneficiaries to lighten the loan repayment burden and reduces the liabilities on the family.
Group Travel Insurance
The group travel insurance policy is helpful for frequent travellers in groups. The employer can buy a group travel insurance plan to protect the group travellers for business purposes against unexpected events, such as travel cancellation, emergency medical situations, terrorism, and other consequences.
Group Hospital Cash Insurance
Under the group hospital cash insurance, the insured gets pre-defined cash benefits in case of hospitalization for at least 24 hours. These daily cash allowances help the insured manage their daily hospital expenses, ICU cover, and compensate for the loss of income.
Group Whole Life Insurance
Group whole life insurance is basically designed to provide lifelong coverage to the employees. This ensures that the beneficiaries remain financially secure in case of their demise.
Key Features of Group Life Insurance Plans
Besides fulfilling the basic life cover needs, multiple features can help the employees and employers after buying a group life insurance plan.
Master Contract Policy
The employer buys a group term life insurance policy from a life insurance company to cover a large number of people under one plan. The premiums are decided by the number of members and the life cover offered. The employer goes through the group term life policy selection process, application, and completes all the formalities of group life insurance.
Affordability is the prime feature of a group term insurance plan. The employer and employee share the cost of the group life policy, making it cost-effective for every member covered. The group life insurance companies offer offline and online group quotes for term life insurance at competitive prices.
The group life insurance policy offers the freedom of participation to the insured. The employer can add or remove any insured at any time. There’s no limit on adding or removing the individuals and no tough formalities to follow.
Wide Range of Plans
The life insurance companies offer various group term insurance plans that perfectly complement the employer’s needs and requirements. These plans cover various needs of the groups, including health, retirement, and life coverage.
To enhance group protection, the employer can choose to add riders with the base plan. Usually, Accidental Death and Disability Benefit Rider and Critical Illness Rider are available to enhance employee protection.
Group Life Insurance Benefits
Group term life insurance provides multiple benefits to both employees and employers. The major benefits of a group life policy can be highlighted as
The employees receive the life insurance coverage as a lump sum amount that can be used to cover immediate expenses and attain long-term financial goals.
When the group insurance scheme offered by the employer provides sufficient life cover, the employee doesn’t need to buy a separate life insurance plan. Hence, the employees can reduce their additional liability and have a higher chance to stay at the workplace.
Group term life insurance plans are more cost-effective than buying individual life insurance policies in India. Since both the employee and employers contribute to the base group term life policy, they must pay a small percentage of the premium compared to the individual life policy.
Professional Fund Management
The professionals handle the fund under group insurance policies hence the employees do not need to worry about the mismanagement of the policy.
Underwriting is the process used by the life insurance company to evaluate the risk appetite of offering a cover. A group term insurance policy provides uniform coverage without any restrictions. Hence the underwriting process is comparatively hassle-free.
No Medical Test Required
Group term life insurance policy requires no medical examination before issuance. This helps every employee gain life cover benefits even after they cross the specified age or medical criteria required for an individual life insurance policy.
Best Group Life Insurance Plans in India
The definition of the best group life insurance plan can differ according to the requirements and needs of the groups. We, D2C Insurance Broking Private Limited (“RenewBuy”), understand the concerns and have prepared a list of group life insurance plans with their key benefits. This will help you to compare and buy a life plan for the group.
|Life Insurance Company||Group Life Insurance Plan||Key Benefits||Minimum Sum Assured|
|Aditya Birla Sun Life Insurance Co. Ltd.||ABSLI Group Protection Solutions (Aditya Birla Group Insurance)||
||Long-term Base Cover: Rs. 30,00,000 at inception Others: Rs. 5,000 per Member|
|Future Generali Life Insurance Co. Ltd.||Future Generali Group Term Life Insurance Plan||
||For social groups with 5000 members or above – Rs 5000/- per member For other groups – Rs 5000/-|
|Tata AIA Life Insurance Co. Ltd.||Tata AIA Group Term Life||
|HDFC Life Insurance Co. Ltd.||HDFC Life Group Term Insurance Plan||
|Kotak General Insurance Co. Ltd.||Kotak Group Health Care||
Life Insurance Companies Offering Group Life Insurance Plans in India
The Indian insurance industry is vast and has 23 life insurance companies that provide robust insurance solutions to individuals and groups. Let’s look at the list of life insurance companies with their claim settlement ratio and solvency ratio to help you make a wise decision.
|S.No.||Life Insurance Company||Group Death Claim Settlement Ratio (CSR) 2021-22||Solvency Ratio (March 22)|
|1.||Aditya Birla Sun Life Insurance||99.59%||1.88|
|2.||Aegon Life Insurance||100%||3.33|
|3.||Ageas Federal Life Insurance||89.92%||3.12|
|4.||Aviva Life Insurance||99.85%||1.82|
|5.||Bajaj Allianz Life Insurance||99.82%||5.81|
|6.||Bharti AXA Life Insurance||97.96%||1.62|
|7.||Canara HSBC Life Insurance||99.18%||2.82|
|8.||Edelweiss Tokio Life Insurance||99.39%||2.11|
|9.||Exide Life Insurance||2.17|
|10.||Future Generali Life Insurance||95.63%||1.83|
|11.||HDFC Life Insurance||99.72%||1.76|
|12.||ICICI Prudential Life Insurance||97.74%||2.04|
|13.||IndiaFirst Life Insurance||99.18%||1.65|
|14.||Kotak Mahindra Life Insurance||99.58%||2.73|
|15.||Max Life Insurance||99.41%||2.01|
|16.||PNB MetLife India Insurance||99.53%||2.09|
|17.||Pramerica Life Insurance||99.42%||4.04|
|18.||Reliance Nippon Life Insurance||99.49%||2.35|
|19.||SBI Life Insurance||97.33%||2.05|
|20.||Shriram Life Insurance||99.56%||2.05|
|21.||Star Union Dai-ichi Life Insurance||98.23%||2.00|
|22.||Tata AIA Life Insurance||99.43%||1.96|
|23.||Life Insurance Corporation of India (LIC)||97.08%||1.85|
* All the data has been provided by the IRDAI Annual Report FY 2021-22.
How Does Group Life Insurance Plans Work?
The main objective behind purchasing a group life insurance policy is to provide financial security to a large group. The following steps will help you understand the workings of a group term life insurance policy.
Employers with at least 10/ 50 employees in their organization can reach out to the life insurance company to buy a group life policy for its members. They can also compare and buy the life insurance policy for the group online.
The life insurance company assesses the nature of the group and decides on the sum assured they are willing to offer to the employees. The employer takes the final decision on the respective premium and sum assured.
Issuance of the Group Policy
The policy issuance process starts once the employer accepts the group life policy proposal made by the life insurance company. Being the master policyholder, the employer pays the required premium amount.
Depending on the type of the group life insurance policy, contributing or non-contributing, the premiums are paid by the employees or the employer.
In case an insured under the group term life insurance policy dies, the beneficiaries get the assured lump sum amount. The group term insurance plan continues for the remaining members without any disturbance. The employee and the family can also enjoy financial support even after the retirement.
Factors Affecting Group Life Insurance Plan Premium
Several factors may affect the group life insurance plan premium cost. The major factors are discussed below
The number of people affects the premium of the group insurance policy. When the group insurance policy is issued for a larger group, the premium is less because the risk is spread across a larger group.
Age and Health Conditions
The group of younger and healthier individuals has a low premium cost in comparison to the group of older people.
The life expectancy for women is longer than for men, and hence, the premium cost is lower for women.
In case the group of people are working in a hazardous environment, the premium cost for a group life insurance policy will be comparatively higher due to increased risk.
The policy coverage and benefits decide the premium cost of a group term life policy. For higher coverage, the premium amount will be higher.
If the group has a high claim history, then the premium may increase.
How to Choose the Right Group Life Insurance Plan?
Finding the right group life insurance policy can be a challenging task for an individual. While deciding on the best group term life policy, there are key factors that you can consider
The first step is to be sure of what coverage you are looking for your employees. Choose the suitable policy coverage after considering the policy inclusions, exclusions, additional, and optional benefits.
Premium cost is the most important consideration when purchasing a group life insurance policy. The premium shall be affordable and should not stress your annual finances.
You can enhance the policy coverage by selecting additional riders for the base group insurance scheme. The common group term life riders include
- Accidental death benefit
- Critical illness benefit
- Waiver of premium benefit
Why Buy a Group Life Insurance Plan from RenewBuy?
As the D2C Consulting Services Private Limited, RenewBuy is committed to easing insurance buying and renewal for customers. We offer the best deals in group term life insurance plans in the market. Reasons why you can trust RenewBuy to buy a group life policy are
- IRDAI certified
- Leading group insurers in one place
- Compare the plans and benefits in a few clicks
- Discounted premiums
- 24X7 customer assistance
- Hassle-free buying and renewal process
Group Life Insurance Plan Buying Process
You can buy a group life insurance plan directly from the official websites of life insurance companies. To make it easy for you, explore the top 10 life insurance companies in India. Also, you can buy the plan from RenewBuy.com. Mentioned are the buying process of group term life insurance policy.
Buy from the Official Website of Life Insurance Company
- Visit the official website of the selected life insurance company.
- Explore the group plans under the ‘All Plans’ sections.
- Compare and select the desired plan.
- Provide the required information and click on the ‘Buy Now’ button.
- After deciding on the suitable premium amount, coverage, and optional benefits, proceed with premium payment.
- Upon successful payment, you will receive the policy documents in your provided email.
Buy from RenewBuy.com
- Visit the official website of Renewbuy.
- Hover over the ‘Insurance’ section and click on the ‘Life Insurance Companies’
- Select the preferred life insurance company.
- Compare the group plans and select the most suitable one.
- Click on the ‘Buy Now’ button.
- A pop-up will show you the plan details and additional information.
- Click on the ‘Proceed to Buy’ button and complete the payment.
- The policy documents are sent to you at your registered email address.
Documents Required to Buy Group Life Insurance Plan
The following documents are required to buy a group life insurance plan
- Completed policy form that includes policy-related details.
- Address proof
- Identity proof
- Income proof of the employer
Group Life Insurance Claim Process
The claim process for a group life insurance policy is the same as the individual life insurance policy. The nominee or beneficiary (the employee) listed can file the claim by following the below process.
The claimant must inform the life insurer in case of death or disability of the insured as soon as possible.
The beneficiary needs to submit the following documents
- Claim form
- Original death certificate
- Insurance certificate
- Address proof
- Identity proof
- Bank passbook or cancelled cheque
The group life insurer will review the claim and investigate the cause of death. Upon verification, the claimant receives the date of claim clearance.
The insurer settles the claim as per the terms and conditions of the group life insurance policy document.
Learn more about which is better to opt for: Group Life Insurance Policy or a Regular Insurance Policy.
Group life insurance is the master solution to cover a number of people working to achieve the same business goal. Group term life insurance provides multiple benefits to the employer and the employees. Before buying a group life insurance from a life insurance company, compare various group insurance policies online or consult with the life insurance expert nearby. For more convenience, explore the RenewBuy Advisor Connect. Get professional assistance from one of the RenewBuy POSP Advisors.
Are you looking for an extended income opportunity? Explore the process of becoming a life insurance agent. Also, learn what it is worth to become a life insurance agent.