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 published to the business or an association. The group insurance policy might be health insurance, life insurance, or any other sort of personal insurance coverage. Let us shed some light on the various sorts of group insurance plans available in India in this post.
What is group life insurance?
Group life insurance schemes (GLIS), as the name indicates, are designed to suit the insurance needs of a specific group of individuals. Employees of a certain organization typically participate in group planning. The EPFO has made it essential for all businesses to provide employees with life insurance coverage under the Miscellaneous Provision Act of 1952.
Members of employee welfare associations, residents of society, professional associations such as the Civil Engineers' Association, medical professionals, credit/debit cardholders of a single provider, customers of a specific bank/lender, and others, in addition to employers, participate in group life insurance schemes.
The primary benefit of choosing a group plan is that it is less expensive than individual life insurance coverage. In most cases, the owner of a group plan is the employer or an organization. The policy's coverage advantages are available to all workers or members of that organization. In 2014, group insurance policies accounted for 41% of India's entire insurance market. Though most firms provide group plans for their workers, few are aware of the many types and advantages of these plans. Let's look at the most common types of group plans in India and their benefits in this article.
Types of Groups
Before delving into the many sorts of group insurance plans available in India, it's important to understand the different types of groups that might benefit from group insurance coverage. There are two sorts of groups in India: Formal Groups and Informal Groups. The specifics of both sorts of groupings are provided below.
Formal Groups: These are mostly businesses or organizations where the employer acquires insurance to protect the staff.
Informal Groups: Members of cultural, social, or welfare organizations create these groups. In most cases, the group administrator or head of the association purchases the group insurance coverage to protect the members.
Classification of Group Insurance Plans:
As previously said, there are several sorts of group insurance plans accessible in India, ranging from health insurance to life insurance. Group insurance plans, on the other hand, maybe roughly divided into two types: non-contributory and contributory. A full overview of both types of group insurance policies is provided below.
Non-contributory: In this form of group insurance plan, group members or workers are not required to pay a premium in order to get policy benefits. A non-contributory group insurance plan, for example, is one in which the employer pays the premium for the employee's insurance coverage.
Contributory: As the name implies, it is a sort of group insurance plan in which group members pay the premium in order to receive the advantages of the insurance cover. Some companies, for example, may remove a percentage of an employee's insurance premium from their pay.
A single contract covers an entire group of people with group life insurance. The policyholder is the employer or an organization such as a labor union, and the workers or members of the group are covered by the group insurance. Such coverage is frequently included as part of an employee benefits package, with the employer footing the bill. Group life insurance is classified into three types: group term life, variable group universal life, and group universal life.
Popular Types of Group Life Insurance Plans in India
Group Term Life Cover
It is a long-term plan that is available to all members of a given organization. It functions in the same way as individual term life insurance does. The following are the key aspects of group term life insurance:
- Death Benefit
- Disability benefits
- Zero maturity value
- Low premium costs
Group Unit Linked Insurance Plans/ULIPs
Group Unit Linked Insurance Plans (GULP), also called Group Gratuity Plans, are comparable to individual ULIPs. These programs provide the added benefit of insurance as well as investing. A portion of the premium is set aside for life insurance, with the remainder invested in stocks. Participants in this plan can invest in the premium using a variety of equities and debt-based ETFs.
The money invested rises over time. In general, most businesses allow employees to take the corpus at the time of retirement or when they abandon their jobs.
Group Pension Plans
Companies provide group pension plans to help employees save for retirement. It is seen as a viable alternative to other famous retirement investing schemes such as the EPF and NPS. The monies invested in these plans increase over time, allowing employees to retire with a sizable corpus.
Group Personal Accident Insurance
It is equivalent to individual personal accident insurance. The only difference is that it is made available to a group. Most businesses, credit card companies, and lenders provide group personal accident insurance to their employees and clients. This plan's coverage covers the costs of accidental accidents that result in hospitalization, partial or medical disability, and death. The term plan differs significantly from the accident plan in that it only benefits in the event of the policyholder's demise. Personal accident insurance, on the other hand, provides for the insured's abrupt loss of earning ability as well as medical expenditures.
Group Employee Deposit Linked 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 plan, the EPFO now provides disability/death payments of up to Rs. 6 lakhs.
Bottom Line
Although holding a group insurance policy is ideal, it is also prudent to have some individual insurance protection. The latter provides you with a lot of freedom and eliminates the need to rely on a certain membership for your insurance requirements. Maintaining a mix of both types of insurance will ensure that you get the best protection available.