All there is to know about group insurance

All there is to know about group insurance

We present the salient features about group insurance, and why it is an important part of one’s employment.

As the owner of a business, the well-being of your employees translates into better output and profitability for you. But it is not enough to merely offer a good salary – employees can feel valued and protected when they are offered insurance. It gives them a feeling of security to know that their company can look after their own and their families’ needs in an emergency.

Consider the following salient facts about group insurance:

* It can be offered to several groups. As a rule, group insurance policies can be offered to groups of people working for a common organisation and who can be insured. Thus, those eligible for group insurance are employees of a company, banks, professional groups working for the same project, NBFCs, microfinance institutions, etc. Normally, the group insurance is purchased by the owner of the organisation and offered equally to all participating members.

* It comes in different types. There was a time when group insurance policies were basic and generic life insurance plans. Today, as leading insurance providers customise and refine their product offerings, there are several added types and features you can find. There can be group insurance to provide coverage for health, gratuity and leave encashment, credit protection, home and car loans, disability and loss of income, etc. Even within these categories, plans may be devised to account for different needs of the members and their loved ones.

* It has several useful features. The purpose of awarding group insurance policies is to safeguard the future financial interests of the members. The policy is awarded equally to all members and covers death/loss of income due to disability/accidental injury. Most often, the employer pays the premium on the policy. More members can be added at a later date, while employers can choose to add critical illness benefit in case of group term life policies. It is more affordable for employers to offer group insurance policies than individual covers, and employees can enjoy these benefits while being employed with the company. The policy lapses once the member quits the organisation.

* It is easy to pay for and maintain. The master policy is issued and monitored by a group administrator appointed by the insurer. The premiums are paid for a period of one year and coverage amount and pay-out type is decided at the outset. The group insurance is renewed every year, and the premium may change as per the size of the group. The documentation is simple and the employer may buy the group insurance plans online.

* It has many benefits. The group insurance policy benefits both employees and employers. Employees get peace of mind that the company will look after their families in their absence (death benefits are exempt under Sec 10(10D) of the Income Tax Act, 1961). The premiums paid are not to be treated as perquisites. Meanwhile, employers can fund their gratuity payments easily through group insurance plans, and they pay a lower cost on these plans owing to lower operational costs.

Thus, offering group insurance policies to employees is a vital component of their employment. Besides, it creates a win-win situation for all.

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