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Who Can Buy A Group Term Insurance Plan In India | Bajaj Allianz Life

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Who Can Buy A Group Term Insurance Plan In India?


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July 05, 2022

By : Bajaj Allianz Life

 

What is a term insurance plan?

 

A term insurance plan is one of the affordable kinds of life insurance plans available in the insurance market. It is a pure life cover, meaning that it offers death benefits in case of the policyholder’s demise. These death benefits are paid out to the policyholder’s nominee, as specified in the term plan.

The life cover that a term plan offers is valid for a specified period, known as the policy term. In return for this life cover, the insurance provider charges a nominal premium from the policyholder. The premiums for a term plan are lower than the costs of other types of life insurance because term insurance is a pure protection cover.

So, that answers the question of ‘What is a term insurance plan?’ Generally, a term insurance plan covers a single individual but there are some term plans that can offer coverage for a group of people and such plans are called group term plans.

 

Buying a group term life insurance plan

 

A group term life insurance is a kind of term insurance where coverage is provided to a group of people rather than just one individual. Irrespective of the number of beneficiaries in a group life insurance policy, the governing contract is known as the “Master Policy” which is a singular contract entered into with the Master Policy Holder (MPH). The MPH is thereafter the administrator of the group, who co-ordinates with the insurer in respect of enrollment and claims of members.

 

Who can buy a group term life insurance plan?

 

So, now that you know the details of buying a group term plan, there is another pressing question that you may have. Who can buy a group term plan, in the first place? Are there any specific groups of people who are eligible for these term plans?

One of the most common groups of people for whom group term plans come in handy are employer-employee groups. Typically, the employer purchases a group term life cover for a group of employees. The employer acts as the master policyholder here, and the employees in the group are each entitled to the base coverage offered by the group term plan.

Aside from employer-employee groups, there are various other groups too who can purchase a group term insurance plan. Here is a list of some such groups.

  • Groups of professional people like a fraternity of medical experts or engineers taking out a common term plan
  • Lending institutions like banks and housing finance companies taking out group insurance for their loan customers
  • NBFCs and microfinance institutions taking out a group cover for their borrowers
  • Residents’ Welfare Associations insuring residents, or Homeowners’ Welfare Associations insuring homeowners
  • Employee unions taking out a group term plan for the employees they represent etc.

These are just some examples of groups that can buy a group term plan. This leads us to the question of why they opt for group cover in the first place. Let’s find out.

 

Why buy a group term life insurance plan?

 

There are many benefits that group term insurance plans offer. Here are some reasons to buy a group term plan.

● They offer cost savings

The biggest reason to buy a group term plan is that they offer savings. , the premium that you will have to pay for a group term insurance policy is generally lower than the premiums you may be charged separately. This essentially gives you coverage at extremely affordable rates. So, if any professional group you are part of is offering a group term plan, you can benefit from buying this kind of life cover.

● They come with tax benefits

Like all term insurance plans, group term plans also offer tax benefits. The premiums you pay for your group cover are deductible from your taxable income, as per section 80C of the Income Tax Act, 1961. Also, the benefits received from the group term plan are tax-free as per section 10(10D) of the Income Tax Act, 1961.If Master Policy Holder pays the premium, the same can be claimed as deduction under Section 37 of Income Tax Act. Also, the benefits received from the group term plan are tax-free subject to satisfaction of the conditions mentioned in section 10(10D) of the Income Tax Act, 1961.

● They offer optional add-on riders

Group term plans also offer optional add-on riders at nominal extra cost. These riders can offer financial benefits in case of an accident or a critical illness diagnosis, among other things. However, to enjoy these rider benefits, your employer or the entity that purchased the policy for the group should opt for them.

 

Conclusion

 

Clearly, there are many benefits that a group term life insurance plan offers. However, do keep in mind that even if you are covered by a group plan, it is always advisable to also have your own individual life cover in place. And you can easily meet this need from the comfort of your home since it is so easy to buy term insurance online these days.

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2Above illustration is considering Male aged 25 years | Non-Smoker | Life Cover Variant | Policy term (PT)– 30 years | Premium Payment Term (PPT) – 30 years | Sum Assured opted is Rs. 1,00,00,000 | Online Channel | medical rates | Annual Premium Payment Mode | 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.

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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. 

The views stated in this article is 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 sales brochure & policy document (available on www.bajajallianzlife.com) carefully before concluding a sale.