Group life insurance is a type of life insurance that is intended to provide financial benefits and protection to an employee’s loved ones after the former’s death. Group life policies offer a much more affordable alternative when compared to individual life insurance products. If you’re looking for ways to provide additional benefits for your employees, group life plans should be considered.
This article will go over the features offered by group life policies, so that you can make an informed decision.
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What Exactly is Group Life Insurance?
As the name implies, group life policies provide life insurance coverage to a specific group of individuals, such as workers of a company, participants of a professional organization, or residents of a housing society, under one single agreement or insurance policy.
Group life plans have certain advantages over individual life insurance products. These insurance benefits are particularly helpful in providing financial security and support to a surviving spouse or children after the death of an employee. Plus, they can be purchased at affordable rates, considering the benefits they offer your employees. Group life coverage could be just what you need to keep your company running smoothly while supporting its employees and their families in difficult times.
Top 4 Group Life Policy Features
The following four important characteristics need to be kept in mind while establishing an effective group accident plan:
1. Peace of Mind
An unpredictable death of a key employee or team member can prove to be catastrophic for business, especially if you have tight deadlines approaching. However, it is nothing compared to what the dependents and family members of the employee have to go through. So, as a team leader, it is your responsibility to provide appropriate life insurance coverage to your staff, so that their loved ones can have a financial backup plan, in case something unfortunate happens to their primary breadwinner.
To ensure that your employees have a safety net to fall back on in the event that they are hurt in an accident, you can also add personal accident coverage to the base group term life insurance policy. This not only gives employees peace of mind but also guarantees that they receive quality care and recover quickly, which is advantageous to the business.
Like its individual counterpart, group life insurance policies offer two different types of coverages:
First, we have the group term life insurance policies. These policies offer life insurance coverage to the group of insured individuals for a pre-fixed period of the term in exchange for premium payments. It is important to understand that these plans do not provide maturity benefits. Therefore, only death payouts are offered. However, add-ons can be included with the base plan to extend its coverage.
Second, there are group whole life insurance plans. These life insurance plans offer coverage until the end of the insured individual’s life. Again, some add-ons are available, which can be included with the fundamental plan to increase the coverage.
Group term and whole life insurance are very popular among the employers and employees of this country. It is due to their affordability, convenience and simplicity that each year an increasing number of people opt for them. The biggest myth about these plans is that they will be expensive for your company as an employee benefit. In reality, these are one of the most cost-effective group insurance policies available in the market.
The best part is that most group insurance providers offer a discount if a set number of individuals are insured under the group insurance policy. This further lowers the amount the company has to spend to offer coverage to the employees who enjoy the plan without paying anything.
4. Tax Breaks
The company can benefit from tax breaks which come with life insurance plans. Income Tax Act Section 37(1) offers tax exemptions on the amount paid as premiums for group life coverage.
Exclusions of Group Life Policies
There are quite a few exclusions that group insurance policies have. If you’ve been looking for the best company to insure the dependents of your employees in case something happens to them, it is important that you know about these exclusions and how they affect the overall cost of your policy.
- Suicide within the waiting period.
- Death due to consumption of drugs or alcohol.
- Death in war.
- Death due to participating in any hazardous activity.
- Death due to illegal activities.
- Death due to childbirth or pregnancy complications.
- Death due to pre-existing illness that is not covered by the policy.
Why Choose Group Life Policy?
Whether you are a non-profit organization or a for-profit business, death is a real thing. One of the most devastating things that can happen to any business is when one of its workers dies suddenly and unexpectedly. Deaths among employees are especially tragic because the individuals affected by this event have to deal with all sorts of financial pressures, which can lead to problems in the organization as well. So, if an employee dies unexpectedly, no one will be able to help them financially and supporting their families may prove to be too much.
Therefore, as a team leader, it is your duty to make sure that your employees are insured against such eventualities, so that their families always have the insurance coverage as a financial backup which is needed during such turbulent times.
Now, if you are confused between choosing group life coverage, group accident insurance and group health insurance, it can be a good idea to search for a plan which best meets your organization’s requirements and budget.
The Bottom Line
Group life insurance is a fairly new category of life insurance designed to cater to the growing needs of employees. It is a win-win for both employees and employers. The former can get a significant amount of protection at a relatively low price, while the latter can satisfy their moral obligation to take care of their employees in the unfortunate event of their sudden demise.
Group life coverage is typically much more affordable than individual life insurance, and it can even be transferred if an employee were to change jobs. As a benefit, group life plans should be considered by any organization that employs full-time or part-time workers in addition to contractors.
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