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What is Group Insurance?

A Group Health Insurance Policy is a type of health insurance plan that covers for a group of people who work under the same organization. This is often offered as a valuable benefit for employees as the premium for the same is borne by the employer. However, the price for the same is comparatively a lot lesser as compared to individual health insurance plans and also benefits employers in tax reductions, therefore making it beneficial for both the employer and employee.

Types of Group Insurance Policy

  • Group Term Life Cover: This type of policy offers a life cover to each member (insured) working in the group (organisation). The premium is collected from the group owner which can be deducted from the salary of the employees on a monthly basis.
  • Group Health Cover: The group medical cover is to meet the unpredictable medical needs of each group member. This plan also covers pre-existing diseases along with the diagnosis costs. In some cases, it covers the maternity expanses, visionary treatment, and dental check-ups too. This may function in the form of cashless card form or the reimbursement of medical expense up to the limit specified.
  • Group Personal Accident Insurance Cover: This policy compensates the insured group’s members in case they meet with an accident during their employment.
  • Workers Compensation Insurance: This policy covers all the employer’s liabilities under the Workers’ Compensation Act 1987. Employers like the construction units and manufacturing hubs must have this insurance policy, as workers (even if the number is less than 20) operate at a high risk of a fatal accident which may follow the partial or even complete disablement of their own selves.
  • Group Pension/Superannuation Plans: The pension plans are said to the best insurance cover because they promise the sense of safety and security. Something which promises a regular monthly income even after 60 is worth sharing the pride. There are different formats of a pension plan are the Provident fund, Gratuity, and Superannuation.
  • Public Liability Insurance: This is suitable for groups which are involved in direct public dealing or provide professional services to individuals. Such individuals can be held responsible for the results of their decisions made while providing the service and may face legal scrutiny and penalties. This insurance covers such expenses incurred by the insured group or its members.
  • Group Travel Insurance: Covers the hazards faced by travellers, including theft of documents and luggage. Can also include health cover for the group members.

Benefits of Group Insurance Policy

There are a host of wonderful benefits associated with the group insurance schemes on offer by the various insurance companies in the market currently.

  • Insurance Cover:Most of the group insurance plans prevalent in India provide automatic insurance cover for life of all members of the group or organization as long as they remain a part of it. This works great for those segments who cannot afford individual life cover through separate policies. The cover provided in such cases is merely a basic amount and the individual member must take other policies after retirement or when leaving the group.
  • Low Premium Cost:As compared to any of the individual plans the premium for the group insurance schemes are much lower. However, the premium depends on various factors such as professional hazards, average age group etc. Currently the One Year Renewable Group Term Assurance Plan of LIC offers the lowest premiums on every lakh of cover provided. This scheme requires annual renewal.
  • Ease of Payment:Since the premiums are deducted from the salary of the employees there is no additional hassle of payment or missing the payment due date.
  • Advantage to the Employer:The employer requires a minimum of 25 members to initiate such a group insurance scheme in their organization and all payment made by the employer towards the contribution for group insurance of employees is considered as business expense and not calculated as profits for the purpose of taxation. This amount is limited to maximum of annual contribution up to 8.33% of salary bills of each individual employee. Such schemes also have the additional benefits of raising employee morale substantially.
  • Advantage to Employee:This is a win-win situation for both sides as such plans by their vary nature enhance trust and loyalty and thus work as retention plans since not is the employee is looked after through the plans but also the welfare of his family catered for through group insurance. Even members of a non-professional group when taking such schemes can avail tax benefits equally applicable to all members. The Sarva Shakti Suraksha of Bajaj Allianz is one such plan.
  • Professional Asset management:In group insurance schemes that cater for gratuity and annuity the assets can be managed by the more experienced and professional experts of the insurance company thus providing greater returns for the employees being covered.
  • Rider Options: With a minimal additional payment, the employees can avail the benefits of various kinds of optional riders such as double accident benefit offered by LIC and other riders such as critical illness or loss of employment offered by most of the private insurance companies in India.