• 7 JUL 2018

    Understanding Group Insurance Policies

    Group insurance is an insurance plan that covers all employees or members under a single master policy. In order to take a group life insurance one needs to be a part of the group. A group may consists of doctors, lawyers, members of cooperative banks, credit societies etc.

    Group life insurance products can be classified into Term Insurance based products and Fund Management based products. Term insurance based products include Group Term Life Insurance and Credit Life insurance whereas, Fund Management based products include Group Gratuity Scheme, Group superannuation, Group Leave Encashment and Group annuities.

    Advantages of Group Life Insurance:

    Group Life Insurance offers cover at subsidized rates. Henceforth they are valuable to huge portions of individuals who can't bear the cost of life insurance.

    Members of an eligible group who are generally uninsurable under individual protection can be secured under group insurance.

    Group protection is more reasonable than a comparative number of individual insurance policies.

    Following are the different types of group insurance policies available in India:

    1. Group Term Life Cover:

    This type of policy offers a life cover to each member (insured) working in the group (organization). The premium is collected from the group owner which can be deducted from the salary of the employees on a monthly basis.

    1. Group Health Cover:

    The group medical cover is to meet the unpredictable medical needs of each group member. This plan also covers pre-existing diseases along with the diagnosis costs. In some cases, it covers the maternity expanses, visionary treatment, and dental checkups too. This may function in the form of cashless card form or the reimbursement of medical expense up to the limit specified.

    1. Group Personal Accident Insurance Cover:

    This policy compensates the insured group’s members in case they meet with an accident during their employment.

    1. Group Saving Linked Insurance:

    Some contribution is deducted from the employee salary as savings and a portion of the insurance amount are utilized as cover against death. Accumulated savings with interest are paid to employees on the exit of the policy like in case of retirement, resignation, termination etc.


    1. Group Credit Life Insurance:

    It is a group insurance cover for a group of employees who are borrowers from the same institution, bank or an employer. On the death of any employee, a lump sum amount is paid by the insurance company in lieu of the loan amount. It also includes permanent disability contingencies.

    1. Group Gratuity Scheme:

    Gratuity rendered is based on the number of years of service by an employee. In case of premature death of any employee, the deceased’s family is entitled to the whole insurance amount benefit which is equivalent to the estimated (based on actuarial principles) gratuity of the employee on retirement in the basis of superannuation or cash accumulation with the rate of interest.

    1. Group Superannuation Scheme:

     It is designed to pay pension to employees on retirement and can be arranged on a contributory or non-contributory basis.

    Most of the Group Insurance Plans that are available in the market are covered under the EPFO (Employee Provident Fund Organization). Group Insurance is beneficial for both employees as well as for employers as it accords a world of benefits to both.

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