Benefits Of Group Term Life Insurance

Our families matter the most to us! Amidst the daily grind of life, we strive to ensure that our loved ones remain healthy and happy.

Employers and organisations have also come up with a thoughtful gesture - group term insurance - to help their employees achieve this goal. It is their unwavering commitment to ensure the well-being of both - their employees and their families.

A group term insurance plan is like a robust safety net that provides financial security for a wider community. In the event of an employee’s unfortunate demise, group term insurance emerges as a lifeline, ensuring the financial well-being and stability of their cherished family members.

Group term insurance plans are also offered by other organisations like banks, NGOS, non-banking financial institutions, etc. to their account holders or members.

In this article, let’s know more about group term life insurance ​​benefits.

What Is Group Term Insurance?

As mentioned above, a group term insurance plan is designed to provide term coverage to a large group of people collectively. The most common example of group term insurance is when a company extends term insurance to its employees through a single policy or contract.

If you are enrolled in a group term plan, your family will receive a fixed sum of money, known as the sum assured, in case you pass away during the policy period. However, it's important to note that there will be no payout if you survive the policy period.

How Does A Group Term Insurance Plan Work?

Group term insurance policies are provided by employers and other organisations like banks, NGOs, professional groups, non-banking financial institutions, microfinance institutions, etc. These policies are extended to their respective employees, account holders, members, and similar individuals.

The insurance company provides a single master policy to the group administrator or the master policyholder - that could be the employer, bank, or organisation. It is their responsibility to issue insurance coverage to all employees, account holders, or members associated with the group.

Benefits Of Group Term Life Insurance Here are some reasons why group term insurance is advantageous for you -

• Provides Financial Protection
  In the event of your unfortunate passing away when the plan is active, group term insurance steps in to provide financial protection to your loved ones. It ensures that they remain secure during challenging times - allowing them to focus on healing and rebuilding.

• Budget-Friendly
  Group term insurance plans are designed to offer cost-effective coverage. By issuing a policy to a large group of individuals, the insurance company spreads the risk across the group - resulting in lower premium rates than individual life insurance policies. This affordability feature makes it easy for employees or members to get life insurance coverage at a reasonable price.

• Simple Application Process
  Another notable feature of group term life insurance plans is the simplified application process. They typically require minimal documentation, making it easier for the group members to apply. They just need to provide their consent and declaration of good health.

• No Need For Medical Tests
  In contrast to individual term life insurance policies, group policies are simpler and more accessible. These policies are simply issued on the declaration of good health - even without medical tests.

• Tax Benefits
  Another beneficial aspect of group term life insurance is the tax benefits* it offers.
  

• As per Section 10(10D)^ of the Income Tax Act 1961, the payout received by your family is exempted from tax.
  

• And, if you pay the premiums fully or partially, you can claim tax deductions up to Rs. 1.5 Lakhs under Section 80(C) of the Income Tax Act 1961.

Conclusion

This was all about group term life insurance policy benefits. Group term life insurance is an effective tool for providing financial security and peace of mind to both you and your family. With its affordability, convenience, and tax benefits, you can ensure the protection of your loved ones from the unforeseen challenges that may lie ahead.