Group term insurance, just as the name suggests, provides coverage to more than one person under a single policy. Such plans are usually offered by organisations as an affordable life cover option. But how do you benefit from a policy that covers numerous individuals? Apart from the low or zero premium benefit, group term life insurance also offers many other advantages to the policyholder. Go through the top 6 benefits of group insurance policy below.
What Is Group Term Life Insurance?
A group term insurance plan is a policy offered to employees by their employers as a work benefit. Mostly such insurance plans are given for almost zero cost unless you choose to increase the coverage or add your family to the policy. Thus, as a part of the organisation, your dependents gain financial security from any risks or mishaps that may affect you. However, one drawback of such group term insurance is that the coverage stops once the company no longer employs you. Therefore, your loved ones shall have no backup during such conditions when you want to quit your job.
Benefits of Group Term Life Insurance
Here are key perks that employees can avail with group term insurance policy:
- Greater financial safety
Term insurance is an agreement where the insurer shall financially safeguard your dependents in your absence. Such a policy can go a long way in giving you peace of mind when it comes to the well-being of your loved ones. Group term insurance policy offers you that safety net without any trouble. Some employers also enable you to increase the base coverage amount to suit your insurance needs. However, you may have to buy the additional coverage for a certain premium rate.
- Maximum protection
Apart from the risk of death of the policyholder, there can be other perils that can affect you. With the help of rider benefits, you can maximise your insurance coverage to get your policy to cover such risks as well. Some common riders are critical illness rider, accidental death cover, loss of income cover and more such rider options are available. Depending on the group term plan chosen by your employer, you may be able to add riders to your policy at additional costs.
- Low premium rate
Most employers provide group term life insurance for almost zero costs or at a nominal rate. However, if you were to purchase an individual term plan with a long policy tenure, you would have to pay a huge term insurance premium. In comparison to that, group term insurance is available for free without having to do much. But in case you want extra coverage with increased sum assured or rider benefits, you may have to pay a premium, which would be low. Hence, you can enjoy insurance coverage at a cost-effective rate.
- No medical checkup
When you choose to purchase a term insurance policy, you need to take a medical test. This helps the insurer learn about any health complications or ailments that you may have. And in case you do suffer from any illness, it can lead to an increased premium quote. However, with group term plans, you don’t have to worry about medical checkups. Employers usually cover the employee right after joining or completion of 30 days without demanding any health record.
- Coverage for family
By paying an additional premium amount, organisations also offer coverage to the family of the employee. You can secure your spouse and children under the group term insurance plan without much hassle. Therefore, you shall save on the hefty charges of buying separate coverage for them.
- Tax benefits
The insurance proceedings paid out to your beneficiary can be claimed as tax-free under Section 10(10D) of the Income Tax Act, 1961. Thus, just like the perks available under individual term insurance tax benefits, you can avail them under your group insurance policy as well.
With this, you must have understood the several benefits of having group term insurance coverage. Though it is recommended to have individual term insurance as well, group insurance offers additional security for free. If you are considering a term plan to secure a financial backup, get insurance today! But ensure to estimate your requirements and choose the coverage amount wisely.