Group Insurance Policies that Offer Life Cover

One of the unique ways in which employers attract talented candidates to work for them is in the form of benefits they offer to employees. Besides the compensation package, an employee also views benefits as compelling factors that determine job acceptance. On the side of employers, benefits are acquired plans that not only attract good employees, but aid in keeping them loyal in the long run. Some of these benefits offered by employers include group life insurance.

Under Employer-Employee scheme, Group life insurance ensures employees that a certain lump sum will be handed out to the employee’s nominees should any unfortunate demise of the employee occur. In this way, the employee is satisfied that his family will be taken care of, at least financially, when the employee is no longer able to provide an income. There are many kinds of policies that offer conditions of life cover.

Types of Group Insurance Policies

There are different kinds of plans under the heading of “life insurance” for groups. In any group life insurance plan, some commonalities exist and one of these is that plans are opted for a group of people. As a result, the group life insurance plan, if purchased by a company for its employees, that company will pay premium to the insurer on behalf of the employees. Members of the group may have varying coverage depending on age, position in the company etc. and as per the requirements of the employer.

Companies decide about coverage of individual members based on different aspects pertaining to the employee, such as age and designation, among others. It is worth knowing how many types of group plans are available as you can gauge the benefits of the plan if you are an employee or an employer. All kinds of group life insurance plans have one thing in common: they offer life coverage along with other different benefits, either in the form of gratuity collection or investment. Further, non-employer-employee group insurance plans also exist.

Some of the “employer-employee” group insurance plans are:-

Group Term Life Insurance

This life insurance policy gives a lump sum amount to the nominee mentioned in the policy, upon the unfortunate demise of an employee within the tenure of the plan. Group Term Life Insurance is a common plan that most employers opt for, as its conditions are straightforward. Generally, the amount of coverage is equal to a multiple of the yearly salary of the employee or may vary depending on the terms and conditions of the scheme.

Group Gratuity Plan

In a group gratuity plan, employers can invest the segregated amount and earn returns on the same to pay employees gratuity. Life coverage comes as a supplementary benefit. In case an employee resigns, leaves the firm after five years, or retires, employers are bound to give employees gratuity subject to fulfilment of certain conditions.

Group Leave Encashment Benefits

Leave encashment is a benefit that firm provide to employees that allows them to accrue their leaves over time. When an employee quits the company, the accrued leaves are paid out in one single sum to them. This sum is paid to the employee's nominees in his or her absence. This payment is done depending on the type of organisation and in accordance with the applicable rules in this regard.

Group Critical Illness Rider

The critical illness rider is not a life insurance policy, but rather an additional rider that may be made available under the group policy, subject to terms and conditions mentioned therein. Employees can benefit from this by paying an additional nominal premium and as per rider’s terms and conditions.

An Illustration: Employees Benefit from Group Life Cover

Tex3 is a company that manufactures textiles. The company has 500 employees. The company recently bought a group life insurance policy with a clause for gratuity and conditions for critical illness coverage. All staff were to benefit from this policy. Mr. Singh, a supervisor in the factory, has been employed with Tex3 for a decade. After a long day, but still within working hours, Mr. Singh experienced severe pain in his chest. He was immediately rushed to the hospital where a heart specialist diagnosed that he had suffered a heart attack. He required treatment for this. His group life insurance policy had a rider for critical illness and a heart attack was under the scope of coverage. Hence, the insurance company had to pay an amount in a lump sum to Mr. Singh as per rider terms & conditions, and this covered his expenses for treatment. This critical illness cover was apart from the life cover available in the group policy

Conclusion

With group life insurance cover, employees get significant benefits with different kinds of options in life insurance policies. However, times are unpredictable, and you may need more than your employer’s life coverage to support you and your loved ones. Hence, you should consider having your own individual policies too, in terms of life insurance. This goes for individual plans that cover you and your family members.

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