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Understand group term insurance plans

December 12, 2018

In any organization or a business establishment, the most important asset is the human resource on which depends the successful allocation, usage and processing of all other resources. A happy and content employee renders her/his services in the most efficient manner possible and a workplace atmosphere of satisfaction brings out the best kind of productivity in a person. For this to happen, it is important for an employer to ensure that the financial interests of the employees remain secure at all times. Having a specific and relevant life insurance plan in place is one such factor that is very essential and basic in nature.

In an organization, such an insurance plan generally means a group term insurance plan that provides complete insurance coverage to each employee. A group term insurance plan secures the financial reserves of the employees and guarantees a secure future for their dependent families even in their absence. In actual practice, many corporate organizations offer group term insurance plans for their employees to safeguard their monetary strengths. Although the employees may have their own individual insurance plans, yet a group term insurance policy is beneficial on the whole and mandatory in places where it is in effect.

group term insurance policy is a long term beneficial contract and all the employees are eligible for it from the time of their joining till they retire (the upper age capping is usually 70 years). Such a policy does not entitle the employee to any proceeds (sum assured) upon surviving the term but provides the payout of lump sum proceeds in the event of demise. The claim benefits are eligible for tax exemption under Section 10(D) of the Income Tax Act, 1961.

When viewed in comparison to an individual term cover, a group term insurance plan has added benefits. These benefits include:

  1. Group insurance cover: A group term insurance policy provides coverage to the entire group of employees, right from the moment they join the concern. This not only makes the whole operation secure and simple (owing to the centralized support system) but also helps in income tax savings (as the premiums are deducted on salary, thus reducing the taxable salary component).
  2. Hassle –free and simple: Unlike individual insurance plans, a group term insurance policy does not require any mandatory medical check –ups or any profiling on the basis of health or any pre-existing condition.
  3. Is economical for the both the employers and the employees: Generally, a group term insurance policy is renewed annually and comes with a grace period (mentioned in policy documents). The employer can save on taxes as the premium payable towards the policy counts as a business-related expense. The rate of premiums may be lower than that for an individual cover and so, a group term insurance policy is wholly beneficial.
  4. Comes with optional riders:  A group term insurance policy comes with optional rider benefits that offer varied entitlements. These are – Accidental death benefit, disability benefit (total and partial), illness benefits (covers both critical and terminal illnesses). Accidental death benefit entitles the nominee(s) to receive the sum assured in the event of the accidental death of the policyholder, whereas disability benefits include clauses entitling the policyholder to receive the sum assured in the event of disability (total or partial). Similarly, the riders for illness benefits declare the eligibility in the related events.

HDFC Life offers various term insurance plans that offer coverage in the event of any unforeseen occurrence and have been formulated or securing the future of your loved ones. For details, click on the mentioned link: https://www.hdfclife.com/term-insurance-plans.

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