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Everything To Know About Group Term Life Insurance

 

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Written ByPalak Bagadia
AboutPalak Bagadia
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Palak Bagadia, Associate – Digital Marketing at Bajaj Allianz Life, with experience spanning content and performance marketing, recruitment, employee engagement in the BFSI industry.
Reviewed ByRituraj Singh
AboutRituraj Singh
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Rituraj Singh,With over 6.5 years of experience in the insurance industry, Rituraj Singh, Manager- Product & Brand Marketing at Bajaj Allianz Life Insurance overlooks new product launches, compliance, and brand projects, leveraging artificial intelligence and technology to enhance outcomes.
Written on: 7th July 2024
Modified on: 7th July 2024
Reading Time: 15 Mins
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What Is Group Term Life Insurance?

If you are wondering about group term life insurance, read on.

The answer to the question of – "What is group term life insurance?" is that, it is a term life insurance for a group of people. They may be employees of an organisation, members of a society or a group of borrowers.

Group term life insurance comes under a single contract. If each individual of a group needs term life insurance, separate policies with different terms and conditions are needed but a group term plan comes under the same contract. There will be a Master Policyholder who will act as the central administrative machinery on behalf of the members.

 

Features of Group Term Life Insurance Plans

 

Some of the salient features of group-term life insurance plans are as follows –

  • The policies are usually issued for a year. Once the coverage nears the maturity date, the policy can be renewed.
  • Usually, pure-term insurance coverage is offered under group-term life insurance plans. On maturity, nothing is paid.
  • Some plans might offer optional riders. If the group chooses the rider, an additional premium would be required.
  • The premiums for group term plans are affordable and the policy also covers older individuals who might not be eligible for an individual term life insurance plan.

 

Who Is Eligible for Group Term Life Insurance Policies?

 

A group term life insurance policy can be taken by eligible groups for their members. Some groups which are eligible for the coverage are as follows –

● Employer-employee groups:

Employers can take a group term life insurance policy for their employees.

● Lender-borrower groups:

Credit institutions who offer loans can also take a group term life insurance policy on the life of their borrowers. Usually, in such cases, a credit life insurance policy is taken wherein the sum assured reduces in tandem with the reduced loan amount. If the borrower dies before repaying the outstanding loan, the benefit paid under the group term life insurance policy is used to repay the outstanding loan1.

 

Can you opt for another Term Insurance Plan Alongside the Group Plan?

 

Do note that you can also opt for an individual term life insurance policy alongside the group plan. This way, you can decide on a different maturity period so different phases of your life are covered. Sometimes, death benefits provided by a group policy may not be adequate to cover all the needs of your loved ones. In such a scenario, you could opt for an individual plan to make the death benefit substantial. Note that such policies exist only until you are part of the group and as per the conditions specified therein.

 

How Does a Group Life Insurance Plan Work?

 

When a group decides to opt for the group life insurance policy, it approaches the insurer and specifies its requirements. The insurer assesses the group’s composition and other details and then grants the coverage. Members who belong to the group get covered under the policy. A single policy is issued called the Master Policy, which insures all the members. Under employer-employee GTL policy, the sum assured of the members can be increased during the term of the policy, depending on the member’s position in the group, through an endorsement and with additional premiums.

The premium for the policy is collected from the group. It can be paid entirely by the group, its members or jointly by the group and its members. However, the insurance company collects a single premium from the group.

Thereafter, if the insured member passes away during the policy tenure, the sum assured is paid to the member’s nominee. The coverage for other members is not affected by payment of sum assured to the nominee of deceased. It continues till the policy tenure.

If a new member joins, he/she can be included in the policy at any time of the year, through an endorsement.

 

Conclusion

 

Group term life plans are convenient and you get the coverage and benefits of the policy if the organisation you are working for provides the same. They also offer tax benefits and comes with affordable premiums because of the presence of a group.

 

FAQs

 

1. What is the minimum amount of sum assured coverage under the group term life insurance?

The minimum sum assured depends on the insurance company, the number of members to be covered, the type of group, the risks associated with the group, the average age of the members, etc. The insurance company underwrites the group’s risks and then determines the sum assured that it would offer.

2. What is the usual tenure of a group term life insurance plan?

Usually, group term life insurance plans are available for one year, after which they can be renewed.

3. What is the maximum age to enrol into a group term life insurance plan?

The maximum age depends on the insurance company offering the group life insurance plan. The age differs across different policies. So, check the maximum age criterion of the insurance company whose group life insurance policy your group is buying.

4. What is the minimum age needed in order to enrol in a group term life insurance plan?

The minimum age for enrolling into a group term life insurance plan depends on the insurance company. You should check the policy wording to know the minimum age.

Reference

1. https://www.insuranceinstituteofindia.com/downloads/IC38/ALEnglish.pdf (Page 144)

Other Reference

● https://www.forbes.com/advisor/in/life-insurance/term-insurance/all-about-group-term-life-insurance-policy-in-india/#:~:text=Group%20term%20life%20insurance%20refers,individual%20during%20the%20policy%20term.

BJAZ-WEB-EC-03516/23

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~Tax benefits as per prevailing Income tax laws shall apply. Please check with your tax consultant for eligibility.

The views stated in this article are not to be construed as investment advice and readers are suggested to seek independent financial advice before making any investment decisions. For more details on risk factors, terms and conditions please read the sales brochure & policy document (available on www.bajajallianzlife.com) carefully before concluding a sale.

The above information is for general understanding and is meant to educate the general public at large. The reader will have to verify the facts, law and content with the prevailing tax statutes and seek appropriate professional advice before acting on the basis of the above information.

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Disclaimer

*Tax benefits as per prevailing Section 10(10D) and Section 80C of the Income Tax Act shall apply. You are requested to consult your tax consultant and obtain independent advice for eligibility before claiming any benefit under the policy.

~Individual Death Claim Settlement Ratio for FY 2023-2024

1Premium Holiday has to be selected at inception to avail this benefit and also depends on other policy terms & conditions


Bajaj Allianz Life Insurance Co. Ltd. | IRDAI Reg. No. 116

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%%Above illustration is for Bajaj Allianz Life eTouch- A Non Linked, Non-Participating, Individual Life Insurance Term Plan (UIN: 116N172V03) considering Male aged 25 years | Non-Smoker | Policy Term (PT)– 30 years | Premium Payment Term (PPT) – 30 years | Sum Assured opted is Rs. 1,00,00,000 | Online Channel | Standard Life | 1st Year Premium is Rs. 6,238. 2nd Year onwards premium is Rs. 6,659. Total Premium Paid is Rs. 1,99,349 | Medical Rates | Yearly Premium Payment Mode | Death benefit opted is lumpsum payout and monthly installments (Lumpsum Payout Percentage : 45, Income Payout Percentage : 55) | Premium shown above is exclusive of Goods & Service Tax/any other applicable tax levied, subject to changes in tax laws, and any extra premium and is for illustrative purpose only. This is inclusive of all the discounts mentioned above.

##Tax benefits as per prevailing Section 10(10D) and Section 80C of the Income Tax Act shall apply. You are requested to consult your tax consultant and obtain independent advice for eligibility before claiming any benefit under the policy.Above Tax benefit is calculated considering deduction of Rs. 150,000 and applicable tax rate of 31.20%.

@Term Insurance plan bought online directly from Bajaj Allianz Life Insurance has no commissions involved.

^^The Return of Premium amount is total of all the premiums received, exclusive of extra premium, rider premium and GST & /any other applicable tax levied, subject to changes in tax laws
Bajaj Allianz Life Insurance Co. Ltd. | IRDAI Reg. No. 116

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Disclaimer

Bajaj Allianz Life eTouch- A Non Linked, Non-Participating, Individual Life Insurance Term Plan (UIN: 116N172V04)

*Tax benefits as per prevailing Section 10(10D) and Section 80C of the Income Tax Act shall apply. You are requested to consult your tax consultant and obtain independent advice for eligibility before claiming any benefit under the policy.Above Tax benefit is calculated considering deduction of Rs. 150,000 and applicable tax rate of 31.20%.

~Individual Death Claim Settlement Ratio for FY 2023-2024

1Premium Holiday has to be selected at inception to avail this benefit and also depends on other policy terms & conditions


Bajaj Allianz Life Insurance Co. Ltd. | IRDAI Reg. No. 116


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Life Cover + 16% Discount** +Save Tax*!
Under Section 80C & 10(10D) of Income Tax Act, 1961*
Get Life Cover + Save tax up to Rs 46,800*
₹2 Cr Term Plan
@ 21/Day²
Free Health Management Services
upto ₹ 31,000 p.a.^^

Disclaimer:

2Above illustration is for Bajaj Allianz Life eTouch II- A Non-Linked, Non-Participating, Individual Life Insurance Term Plan (UIN: 116N198V01) considering Male aged 23 years | Non-Smoker Preferred | Annual Income =>Rs. 15,00,000 per annum | Indian Resident | Policy Term (PT)– 30 years | Premium Payment Term (PPT) – 30 years | Sum Assured opted is Rs. 2,00,00,000 | Online Channel | Standard Life | 1st Year Premium is Rs. 7,159. 2nd Year onwards premium is Rs. 7,760. Total Premium is Rs. 2,32,199 | Medical Rates | Yearly Premium Payment Mode | Death benefit opted is lumpsum payout and monthly instalments (Lumpsum Payout Percentage : 40, Income Payout Percentage : 60). Income payout instalment opted for 40 years | Premium shown above is inclusive of Online Discount only, no other discounts have been considered and exclusive of Goods & Service Tax/ any other applicable tax levied, subject to changes in tax laws, and any extra premium and is for illustrative purpose only. For more details on risk factors, terms and conditions please read sales brochure & policy document (available on www.bajajallianzlife.com) carefully before concluding a sale.

**5% Discount applicable for customer's first individual life insurance policy, applicable only on first year’s premium. 5% Discount for salaried customers, applicable only on first year’s premium. 6% Discount on online purchase is available for regular premium payment and limited premium payment frequency, applicable only on first year’s premium.

*Tax benefits as per prevailing Section 10(10D) and Section 80C of the Income Tax Act shall apply. You are requested to consult your tax consultant and obtain independent advice for eligibility before claiming any benefit under the policy. Above Tax benefit is calculated considering deduction of Rs. 150,000 and applicable tax rate of 31.20%.

^^Get Free Health Management Services upto Rs. 31,000 per year

Health Management Services Frequency Cost (₹)
Doctor Insta-Consultations 3 consultations per month = 36 consultations per year Average cost per session = ₹500
Total cost per year = ₹500 * 36 = ₹18,000
Health Coach
(Diet & nutrition consultations)
1 consultation per month =
12 consultations per year
Average cost per session = ₹500
Total cost per year = ₹500 * 12 = ₹6,000
Emotional Wellness
(Psychologists consultations)
1 consultation per month =
12 consultations per year
Average cost per session = ₹500
Total cost per year = ₹500 * 12 = ₹6,000
Network discounts: Throughout the year Assumption – Total expense on these services throughout the year
Medicines (M) = ₹5,000
Lab-test booking (L) = ₹5,000
Total discounts that can be availed:
M - 10% = ₹500
L - 10% = ₹500
Total per year as per assumption ₹31,000

Note: The above mentioned costs are based on estimated average market price for respective services. T&C apply.

Doctor Insta-Consultations and Health Coach Services are unlimited and the above numbers are assumed only for the purpose of calculation of the yearly benefit.

Bajaj Allianz Life Insurance Co. Ltd. | IRDAI Reg. No. 116

 

BJAZ-OT-EC-10260/24

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