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Group Term Insurance is a highly convenient yearly risk insurance product which pays a Face Amount to the employees in the event of any cause of death. A Group Term insurance plan is not only cheaper than individual coverage but also waives the requirement of medical tests in most cases. In addition to add-on likes accident, Critical illness & disability riders etc,.
Difference between Individual Term Policy and Group Term Life Policy
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The main attraction of group insurance is the ability to cover large number of individuals in a cost efficient manner.
Group insurance is cost efficient because incurs lower acquisition expenses; by its nature pre-empt the need for individual underwriting; makes use of a single contract with the plan sponsor instead of having to issue individual policies; and efficiently collects premium payments through payroll deductions or a single payment from the employer.
The insurance cover also has relatively simple data requirements: there are for example no cash values per employee and there is no need for seriatim valuation. Thus, in comparison to individual life insurance, group life insurance is more cost-effective per thousand of rupees insurance cover.
Individual term policy suicide is not covered in 1st year but in group term policy it can be waived off.
FREE COVER LIMIT
The “Free Cover Limit” (FCL) is the maximum amount of insurance cover that does not require any evidence of insurability from participating employees. The FCL is also, perhaps more fittingly, called the “No Evidence Limit” or “Automatic Acceptance Limit.” Having a FCL is a significant cost and time saving feature.
The Members who are above FCL have to undergo Medicals. For modest amounts above the FCL at younger ages, only a health declaration or short questionnaire may be required; for larger amounts and for older ages, the underwriting requirements would progressively become comprehensive and eventually would include full medical and financial underwriting. If a member is found to be substandard, the rating only applies to the amount exceeding the FCL
To further protect your employees against a life full of uncertainties, the plan allows you can take add on covers like Accidental Death Benefit, Critical Illness Rider etc.
Employer Benefits:
It provides a comprehensive life insurance cover at a lower cost as compared to individual life insurance policies.
It is a tax efficient way of securing benefits to employees. Premiums paid by you are not treated as taxable perquisites, for your employee. And for you it is a deductible business expense.
Helps employee retention.
Allows employees to contribute part of their premium.
Employee Benefits:
They get comprehensive life insurance coverage. It provides for payment of the Sum Assured to employees’ beneficiaries in the event of an unfortunate death.
They get insurance cover with minimal or no medical examinations.
Hassle-free processes of keeping life cover in-force.
In case an employee leaves, he can still choose to continue the life cover by converting it into a regular individual policy (subject to certain conditions).
In case employees are paying premiums, they are eligible for tax exemption under Section 80C of Income Tax Act.
GTL Rate for Example:
For a group size of 300 individuals and average age group of 30-40 years the premium would range from Rs.1 to Rs.1.75 per thousand Sum assured approximately.
Premium rate depends on past claims experience, average age group, group size, type of industry, gender etc.
Data Required for Group Term Life Policy:
Name of the Employee
Date of Birth
Employee ID
Designation
Date of Joining
Gender
Retirement Age
Salary Details
Past 3 Years Death Claim Detail.
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