Term insurance policies are among the most sought out options by individuals who wish to protect their families financially. With a suitable term policy for your loved ones, you can be at peace knowing that your family will be protected when you’re not around.
Purchasing term insurance plans is also quite easy these days. For example, most insurers like Tata AIA allow customers to purchase term policies online. They also offer calculators to help customers calculate term policy premiums for Tata AIA term insurance plans.
Apart from these benefits, insurers these days also offer different variants of term insurance like the group term insurance plan. With a group term plan, you can offer term insurance coverage to a group of individuals. However, there is a little confusion around who can purchase a group term plan.
Who Can Take Group Term Life Insurance Plans?
Many individuals think that the group term insurance plan is restricted to employer-employee groups. However, this is not the case. Any group that holds certain individuals with similar risks and interests can purchase the group term life insurance.
For instance, if a debit card company offers debit cards to a group of individuals who are employed at numerous offices. The debit card company can offer the group term life plan for the customers without any issues.
Other groups that qualify for the group term life insurance plan are:
- Banks and financial institutions that offer financial help for specific areas like housing can offer the group term plan to their customers
- Non-banking financial institutions for their borrowers and customers
- Microfinance institutions
- Professional groups like engineering societies, medical institutions, etc
- Employee unions or other similar organisations
Any group formed for purposes other than life insurance can buy the group term life cover for their members.
How Does Group Term Insurance Plan Work?
The group head will receive the plan once they have paid the initial premium amount of the policy. All the employees of the organisation that are included are eligible for the benefits of a term insurance plan once the payment of the initial amount is made for one year.
When you’re a member of the policy, you get the advantage to choose the sum assured either additionally or through your salary account. Once the premium payment is made, the policyholder and the employees will be covered under the group term policy for a year from the policy initiation date. The group-term insurance can be renewed annually. The premium value is subjected to fluctuation as per the changes in the group sizes.
Features of Group Term Insurance Plans
- Adding members: With a group term insurance plan, you get the flexibility to include members anytime during the year.
- Predetermined amount: A predetermined amount will be paid to your family if you pass away.
- Riders: You get to enhance the coverage you are liable to get through the policy with the help of riders. You can include different riders like the critical illness rider, disability, accidental death, etc.
- Cost-effective: They are cost-effective options compared to purchasing an individual term insurance plan. This is because the insurer combines different costs like maintenance, renewal, management, etc., into a single plan. As a result, you get suitable coverage at a lower premium amount.
- Gratuity benefits: Most companies offer gratuity benefits with the group term plan. The gratuity benefits help you save funds for gratuity payments to the employees retiring from your company.
Purchasing group term plans is an efficient way to ensure you provide insurance coverage to a group of individuals. A group term plan can be purchased by any group that wasn’t formed to purchase life insurance. The group term plan offers benefits to the individuals covered under the plan, and the employer who has purchased the policy.