Group Insurance

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Definition:

An insurance policy that covers a defined group of people, such as employees of a company or members of a group is called a group insurance policy.

Description:

A group insurance plan comes at a low premium and can be made into customised plans. The group insurance policy is for the benefit of both employee and the employer. The policy helps the policyholder/employer in employee retention.A group insurance policy can be of these types:

• Term life insurance: The sum assured or the coverage amount is paid to the family of the deceased group member (employee) due to the sudden death.
• Gratuity: A group gratuity scheme is for the employees who complete 5 years in an organisation.
• Credit Risk: The group insurance policies also protect the employees who have taken loans in life. The group policy provides protection in case of unfortunate death or disability.

Example:

REC Limited bought a group term life insurance policy that covered all the 255 employees working in the company. One employee Arnab went on a company’s tour where he met with an accident and died. The company filed for the claim and paid the dependents in the family, the amount of sum assured.