Doesn’t everything seem good when everyone in the family is happy and healthy?
The vibes are perfect to live. Ever thought why?
It is just because the care and warmth amongst the family members are tighter. It gives you a feeling of security. And when secured, you can give your best! True?
Similarly, imagine that every employee of your organization is free from the worries of medical emergencies. Won’t they be able to concentrate more on work and feel relaxed? Again, it will be because they know that even if anything goes wrong, there is someone to take care of them. But how can you as an employer give them the sense of security and drive in them the feeling of belongingness? For employers, it is convenient and simple to buy a group insurance policy and offer umpteen financial protection to their employees.
“Million wish for financial freedom,but only those that make it a priority have millions.”-Oscar Auliq-Ice.
If as an employer you provide the financial security via group insurance to your employees, you will be able to generate millions for yourself. The logic is simple, you give your employees care, they return it with responsibility in abundance.
Let us see further what a group insurance policy is and how it benefits employers and employees.
What is Group Insurance?
A group life insurance policy offers life cover to the group of people who are insured under the same contract. These are the individuals who work together, for example employees of an organization, members of a housing society, and members of a professional association all covered under the same contract.
- The policy owner in common is an employer and it covers all the employees that work together for the company.
- The cost of group life insurance is less which makes it an attractive offer for the employees as well as the employer. The premium is paid by the employer but at times the employees may be asked to share the premium. The percentage share of the premium will still be lesser than the individual life insurance premium.
- Under a group life insurance policy, the main insurance contract is kept by the employer and all the employees are given the certificate of insurance.
- Among the different types of life insurance policy, group term life insurance is the one that is most commonly offered. Most often, the premium for the group term insurance is deposited by the employer.
- The group life insurance policy contract is renewed every year. For an employee, the policy continues till the date of employment with the organization. But the cover ceases to exist when the employment is terminated.
After understanding what a group life insurance policy is, let us now look at the coverages under the insurance cover.
What is covered under the Group Life Insurance Policy?
A group life insurance policy is a contract between the insurance company and the employer who wishes to cover all his employees under one policy. The master contract is in possession of the employer. The life insurance policy provides coverage for:
- Death of an employee/member.
- Permanent disability of an employee/member.
- Both.
Next let us now look at the benefits of the policy.
Benefits of the Group Life Insurance for Employers.
These are the benefits of the group life insurance for the employers:
- High employee retention:
The basic idea behind offering the group life insurance to the employee is giving them the feeling of care. Once the employee feels safe, they are better able to concentrate on their work. With the group life insurance policy, the employers are more fascinated towards their jobs. It reduces the attrition rate and increases the employee retention rate boosting their loyalty.
- Low Premiums:
The premium under the group life insurance policy is payable by the employer. Though it is a cost to the company, it is worth making as only if the employees are happy, they will deliver quality work. The premium is low for a group life insurance policy in comparison to that of the individual life insurance. This is again a good deal to make.
- Assurance for quality work:
An employer takes efforts to keep their employees motivated enabling them to deliver work of high quality. When an employer buys a group life insurance policy for their employees, they can be assured of quality work.
- Tax Benefits:
An employer gets the tax benefit as they pay the premium for group life insurance policy. The annual premium paid is eligible for deduction under Section 80C of Income Tax. The premium paid for the insurance policy should not exceed 10% of the sum assured. The maximum limit of deduction is Rs.1.5 lakhs.
Benefits for the Group Life Insurance Policy for Employees.
These are the benefits of the group life insurance policy for the employees.
- Price: When an employee gets the group life insurance cover through an employer, they hardly have to pay any premium. Even if they are asked to share their contribution, it is less than what they would have to pay individually. In short, the group life cover is affordable.
- Annuity: Some group insurance plans provide the employees with the retirement or the superannuation plan. The benefit can be availed as pension or post retirement.
- Convenience of purchase: It is quite convenient for the employees to get a group life cover. They get the insurance policy via their employers. In short, individual employees do not have to take much pains for life cover.
- Liability Cover: At times, the group life insurance policy provides liability cover for the unpaid dues or loans in case the covered member dies.
- Long-term protection: At times, a group life insurance policy helps employees to get financial protection for long-term needs.
- Easy Acceptance: Under a group life insurance policy, the probability of risk is computed on the basis of age factor largely. So even if you are suffering from any illness,chances are that you will be covered under the insurance policy.
Though the policy offers benefits for an employee, the important fact to know is that the insurance cover continues only till the employee is working with the organization. Once you leave the job, the benefit applicable under this policy will cease to continue. Also, with a group life insurance policy you have a limited choice of policy that you can make. Largely, the group policies are term insurance cover. Apart from the benefits, another constraint with the group life insurance could be the limit of sum assured. The coverage amount can be low. This is why it is favorable for employees to buy an individual life insurance policy also.
Conclusion:
A group life insurance policy is often a part of a benefit package that the companies offer to their employees. While it is a part of protection strategy, the insurance policy does provide several benefits also. Group life insurance policy features income-tax free death benefits with a fixed amount of coverage. The policy shows no bias to any employee in the company and they all are treated equal under the same cover.
The employees do not own the policy as it is provided to them by the employer. One of the best facts associated with the group life insurance policy is that there is no medical underwriting. For more details on different types of group life insurance policy, please read here.
