According to a survey, 80% of the employers offer company-paid group term life insurance plans to their employees as a benefit. Some employers also allow the employees to include their family members under the same group insurance policy. Group insurance plans will enable the employer to provide affordable life coverage to their employees.
Group term insurance plans, in specific, have become quite popular among both employers and employees. Many employers provide this insurance cover, at no cost, with a base coverage amount and allow the employer to enhance the coverage through deductions from the salary. They are an excellent way to reduce attrition rate and give a sense of belongingness to the employees.
What is a group term life insurance plan?
- A group term life policy is a type of insurance cover that provides a death benefit to the employee’s family in case of an untimely demise of the employee. At the same time, they are employed at the company.
- Group term life covers have become an important constituent of the employee’s benefits package, which the employers provide, and the monetary compensation.
- This type of insurance policy helps provide peace of mind to the employee and helps the employers retain the talent.
How does a group term life plan work?
- A group term life policy is a type of life insurance policy insurance that the employer provides to its employees.
- There are two types of group life insurance plans: contributory and non-contributory plans. Under contributory group life insurance, the premium for the policy is paid by both the employer and the employee. Under a non-contributory group life insurance plan, the employer pays the entire premium.
- Group term plans also give the employee an option to include their family members in the same policy.
- Moreover, they are annually renewable, i.e they provide coverage for one year. In case the employee passes away due to an unfortunate event during the policy tenure, while being employed at the same organisation, a death benefit shall be provided to the family of the employee.
What are the benefits of a group term life insurance policy?
A group term life plan provides life insurance coverage, annuity benefits, gratuity, liability protection, etc.
Advantages of group life insurance policy for employees
- Affordable Cover (By Default): Group life insurance plans offer affordable life cover to each employee. As compared to having an individual life insurance policy, a group life insurance policy is quite affordable and cost-effective as it provides default life cover to the employees. This type of life insurance policy also allows the employee to include their family members under the same policy at an affordable price.
- Easy Claim Settlement: The claim settlement process for group life insurance policies is quite simple and easy to follow. In case of an untimely demise of the life assured i.e. the employee, the beneficiaries can easily apply for the claim by submitting required documents to the claims team of the organisation.
- Gratuity: If the employee has completed five years of service or has been in the system for more than five years, they will be eligible for gratuity as a cover if they choose to resign or retire. The group life insurance policy will help the employers create a gratuity corpus for the employees through various investment options under the insurance policy.
- Credit Protection: Group life insurance policy provides financial assistance against unpaid dues or loans of the employee in case of their untimely demise.
Advantages of group life insurance policy for employers
- Employee Retention: Having group life insurance can be considered an investment because employees generally prefer insurance benefits and put them at the top of their lives. With the help of a group life insurance policy, the employee can ensure a reduced attrition rate while increasing employee retention at the same time. This also creates a sense of belongingness among the employees and boosts their loyalty to the organisation.
- Encouraged Employees: It is noted that employers are likely to stay with an employer who provides insurance benefits as an employee benefits package that is provided to them by their employer. This creates a sense of security and gives peace of mind to the employer. This way, the employer will be able to ensure constant safety of their employees, resulting in high morale among the employees.
Providing a sense of security to the employees of an organisation, should be an organisation’s topmost priority. Without healthy, loyal, and cared for employees, an organisation may find it difficult to reach its larger goals. With the help of a group life insurance policy, an employer can ensure the well-being of the employees, and pump up their morale levels. It is important to understand that only motivated employees remain efficient and productive for an organisation in the long run. Nowadays, many employers are adopting the concept of offering group life insurance products as a part of employee benefits package to their employees and so should you, if not done yet!