The word group insurance refers to an insurance plan that covers a group of individuals, most often workers of a company or members of an organization. The benefits are determined by the policy statement issued to the company or association. The group insurance policy can be health insurance, life insurance, or any other type of personal insurance coverage. Let’s shed some light on the different types of group insurance plans available in India in this article.
What is group life insurance?
Group life insurance (GLIS), as the name suggests, are designed to meet the insurance needs of a specific group of people. Employees of a certain organization are usually involved in group planning. The EPFO ââmade it essential for all businesses to provide their employees with life insurance coverage under the Miscellaneous Provisions Act of 1952.
Members of employee protection associations, company residents, professional associations such as the Association of Civil Engineers, healthcare professionals, single-vendor credit / debit card holders, customers from a specific bank / lender and others, in addition to employers, participate in group life insurance plans.
The main advantage of choosing a group plan is that it is less expensive than individual life insurance. In most cases, the owner of a group plan is the employer or an organization. The benefits of policy coverage are available to all workers or members of this organization. In 2014, group insurance policies represented 41% of the entire Indian insurance market. Although most companies offer group plans for their employees, few are aware of the many types and benefits of these plans. Let’s take a look at the most common types of group plans in India and their benefits in this article.
Types of groups
Before exploring the many types of group insurance plans available in India, it is important to understand the different types of groups that might benefit from group insurance coverage. There are two kinds of groups in India: formal groups and informal groups. Details of the two types of groupings are provided below.
Formal groups: these are mainly companies or organizations where the employer takes out insurance to protect staff.
Informal groups: Members of cultural, social or welfare organizations create these groups. In most cases, the group administrator or association leader purchases group insurance coverage to protect members.
Classification of group insurance plans:
As stated earlier, there are several types of group insurance plans accessible in India ranging from health insurance to life insurance. Group insurance plans, on the other hand, can be roughly divided into two types: non-contributory and contributory. Below is a complete overview of the two types of group insurance policies.
Non-contributory: In this form of group insurance plan, group members or workers are not required to pay a premium to obtain policy benefits. A non-contributory group insurance plan, for example, is a plan in which the employer pays the premium for the employee’s insurance coverage.
Contributory: As the name suggests, this is a kind of group insurance plan in which the group members pay the premium in order to enjoy the benefits of the insurance coverage. Some companies, for example, may take a percentage of an employee’s insurance premium from their wages.
A single contract covers a whole group of people with group life insurance. The policyholder is the employer or an organization such as a trade union, and workers or group members are covered by group insurance. Such coverage is often included as part of a benefit plan, with the employer footing the bill. Group life insurance is classified into three types: group term life insurance, group variable life insurance and universal group life insurance.
Popular Types of Group Life Insurance Plans in India
Group term life insurance coverage
It is a long-term plan accessible to all members of a given organization. It works the same way as individual term life insurance. Here are the main aspects of group term life insurance:
- Death benefit
- Disability benefits
- Value at zero maturity
- Low premium costs
Insurance plans linked to group / ULIP units
Group Unit Linked Insurance Plans (GULPs), also known as group bonus plans, are comparable to individual ULIPs. These programs offer the added benefit of insurance as well as investment. Part of the premium is reserved for life insurance, the rest being invested in stocks. Participants in this plan can invest in the premium using a variety of stocks and debt-based ETFs.
The money invested increases over time. In general, most companies allow employees to take the corpus at the time of retirement or when they leave their job.
Group retirement plans
Companies offer group retirement plans to help employees save for retirement. It is considered a viable alternative to other famous retirement investment schemes such as EPF and NPS. The sums invested in these plans increase over time, allowing employees to retire with a substantial body of work.
Individual group accident insurance
It is equivalent to individual accident insurance. The only difference is that it is made available to a group. Most businesses, credit card companies, and lenders provide group accident insurance for their employees and customers. The coverage of this plan covers the costs of accidental accidents which result in hospitalization, partial or medical disability and death. The temporary scheme differs significantly from the accident scheme in that it only benefits in the event of the death of the insured. Personal accident insurance, on the other hand, provides for the sudden loss of the insured’s earning capacity as well as medical expenses.
Group Employee Deposit Insurance (EDLI)
This insurance plan is included in the EPF. The benefits of these plans are determined by the employee’s contribution to the PPF program. For employees insured by this scheme, EPFO âânow pays disability / death benefits of up to Rs. 6 lakhs.
While it is ideal to have a group insurance policy, it is also prudent to have individual insurance protection. The latter gives you a lot of freedom and eliminates the need to rely on some membership for your insurance needs. Maintaining a mix of the two types of insurance will ensure you get the best protection available.