Group Term Life Insurance: Things You Need to Know

Group Term Life Insurance

A group term life insurance can be a good option when you are looking to cover many people like a family in one insurance. 

But before you decide on which term life insurance to buy, you must ensure that you know exactly what you need. LNG can help you understand insurances and also buy the right kind of insurance. 

What Is Group Term Life Insurance Policy?

Group term life insurance is a type of insurance protection that provides life insurance to a group of people under a single policy. In the unfortunate event that something untoward was to happen to the covered individual during the coverage period, it offers the beneficiaries financial protection.

Who Is Eligible For Group Term Life Insurance Policies? 

There is a minimum age of entry that is 18 years of age and maximum is before 69 years of age. The premium generally varies according to age and also entails tax benefits. It comes with several riders, including accidental death, critical illness, permanent total disability, etc.

They are offered to the following people

  • Employer-employee groups
  • Non employer- employee groups
  • Banks
  • Professional groups
  • Non-banking financial institutions
  • Microfinance institutions

Features of Group Term Life Insurance Plans

1. Death Payout

In the terrible event that an employee perishes in an accident, the group life insurance pays the nominee that the deceased person chose the full amount that is promised.

2. Term insurance protection

Is provided to employees by default as a benefit benefits bundle When a person joins a company, they are automatically enrolled in the plan. Some companies additionally permit staff members to acquire an extra individual plan in addition to the group plan the corporate policy that remains in effect even after an employee quits.

The employer is responsible for paying the premium for the group life insurance plan. However, there are instances where the employee must pay the premium and the money is taken immediately out of their paycheck. 

3. Professional fund managers

With experience oversee the money amassed under the group life insurance policy. In the event of an emergency, the employer is given enough money.

As a result, fund managers oversee superannuation, gratuities, and other payments on the employer’s behalf. After working for a specific amount of years for a single company, all employees are eligible for gratuity benefits. Employers can use the savings from group life insurance to pay employees’ gratuities.

4. Credit protection

Banks and lending organizations frequently have to lose money when an insured person passes away with outstanding loan debt.

5. Master Contract

Regardless of whether a worker has health insurance or not, they are all immediately covered by the group life insurance policy. It’s a master contract in which a business purchases a master policy, the premium for which is based on the quantity of members and the corporation’s chosen total insured amount.

6. Premium

The premium is inversely correlated with the size of the group. The premium rate rises as the membership does, and vice versa. If the insurer receives any extra premium funds, it will return them to the company.

7. Community life insurance

Community life insurance is available in two different forms: contributory and non-contributory. In the first instance, the worker makes a contribution to the plan by devoting a percentage of

8. Coverage

Depending on a member’s position and rank within the company, several group term life insurance plans offer varying levels of coverage. Benefits for upper management are much higher than those for lower management. On the other hand, some small and medium-sized organisations provide all of their employees with uniform, flat coverage.

9. Policy term

The normal duration is one year. The policy must then be renewed annually after that.

10. Portability

Because a person’s insurance coverage is based on his or her existing employment, it instantly expires when that employment is terminated. Some insurers, though, give the employee the choice to switch their group

List of Best Group Term Life Insurance Plans

Here are few of the best Term Life Insurance companies in India that give you a good coverage at good prices. 

  • Bajaj Allianz Life Insurance Group Term Insurance
  • Tata AIA Life Insurance Group Term Life
  • Future Generali Group Term Life Insurance Plan

How Does Group Term Life Insurance Work

A group insurance policy is essentially a single master contract, so it makes little difference how many people are covered because a single group administrator (master) maintains the legal connection between the policyholder (the employer) and the insurance provider. The amount of the sum assured is determined by him, and the premium is paid in accordance with his decision. This also means that no individual underwriting is required while new members can be added at any point during the course of the year. Most big-sized organisations usually take these policies for their staff.

Group Term Life Insurance Benefits

Policies for group term life insurance are advantageous to employers in the same way that they are advantageous to employees.

The group term life insurance policies assist employers in easily covering their gratuity liability. Strategically constructed gratuity funds are used to cover further gratuity payments, easing the strain on the employer.

The performance of the client’s chosen funds will be taken into account when calculating returns on investment.

In India, group term life insurance plans are more affordable due to the lower cost of group scheme administration.

Better-performing funds will generate higher returns, which will lower the employer’s cost.

Some programmes provide employers with both gratuity bonuses and life insurance coverage.

Related Blog: Benefits of Group Term Life Insurance Policy

Frequently asked questions about group term life insurance

Q. Is Group Term Life Insurance worth It

Yes, Group Term Life Insurance helps secure a group of people at affordable rates and hence could be a good option. 

Q. Is Group Term Life Insurance Subject To Federal Income Tax

If the face amount of the policy is less than $2,000, the cost of employer-provided group term life insurance on the life of an employee’s spouse or dependent is not taxable to the employee.

Q. Is Group Term Life Insurance Taxable

Both companies and employees can gain tax-wise from group term life insurance coverage. According to current tax laws, Section 10(10D) of the Income Tax Act, 1961 exempts death benefits from taxation. Additionally, group insurance programmes are successful in both employee retention and welfare.

What Is the Difference between Group and Term Life Insurance?

Permanent (or full) and term insurance are both included in the category of individual policies, which are owned by a single person. On the other hand, group life insurance usually takes the shape of a life insurance plan that is provided by your workplace.

What Is the Difference between Group Term Life Insurance vs. Individual?

All of the company’s employees are covered by a single plan under a group insurance policy. The employer completes all of the paperwork necessary to obtain life insurance. Individual life insurance, as the name implies, solely protects you (and in some cases, your spouse)


A type of insurance cover known as group term life insurance offers life insurance to a number of people under a single policy. It provides the beneficiaries with financial security in the sad event that something unfavourable occurs to the covered individual throughout the coverage period.

Secure your employee’s families with group term life insurance, for more information consult with Life & General Insurance.


About Author

Related Post