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Term insurance has grown to be a common financial tool for people to use, to safeguard their families in the event of their untimely death. Group term insurance plans are now being offered by companies to their employees as one of the benefits of employment. It is a great approach to guarantee employee satisfaction and give financial security.
Group term life insurance is a type of life insurance in which a single policy covers a number of individuals or a group of people. The purpose of group term insurance is to provide the nominee or beneficiary with financial security in the event of death of the insured person within the policy's term.
Group term insurance has various salient features like -
Employers offer group term insurance to their employees as a perk of employment. Many large companies offer all their employees free group term insurance as well as the option to tailor and add riders to their plans at low cost. The kind of coverage provided is determined by each company's policy.
The premiums of Group Term Insurance Plans are considerably less expensive than those for individual term insurance policies because the company buys the policy on behalf of a sizable group of employees. Some employers offer group term insurance completely free of charge. On the other hand, certain companies just cover a portion of the premiums; the rest is covered by the employees. Companies choose the death benefit in accordance with employee hierarchy and give employees the choice to personalise their term insurance plans. Group term insurance has many advantages for both companies and employees.
Employer is the master policyholder who issues their employees with sum assured coverage under a single master policy. The amount of the sum assured is chosen by the master policyholder and employer provides a similar life cover for all the employees. However, some companies also offer life insurance based on company hierarchy levels.
Either the member's loan amount or the employee's salary is linked to the sum assured. The life insurance becomes equal to a multiple of the annual pay if it is tied to the salary. One or two times of an employee's annual pay is typically the amount of life insurance coverage. In most cases, the employer covers the entire cost of the premiums; however, there are rare instances where the company only pays the maximum amount, with the remaining amount being deducted from the employee's salary.
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*Tax benefits are subject to conditions under Sections 10(10D) and other provisions of the Income Tax Act, 1961.