Life insurance for a group works like a collective cover for a group of individuals rather than individual cover for life. The group can be of any number and must share some commonality—employees of a company, members of an association, payers of a club or a group of depositors in a bank. Usually the cost of insuring a group is lower than what it would cost to insure the members individually. Hence group life insurance schemes are popular with companies as an incentive for their employees because the later can then feel secure. Almost all life insurers in India offer group life insurance schemes (GLIS).
Employee Provident Fund Organization (EPFO) in India has made it mandatory for employers to provide insurance cover for their employees under the Miscellaneous Provision Act 1952 and Employee's Provident Fund. Private companies also try to provide this affordable cover as an incentive for their employees and club it in the latter’s annual compensation package. Subscription to the Group Life Insurance Scheme may be of the following types:
A contributory group life insurance scheme is one in which members contribute partly or fully towards paying premium for the group insurance cover. For example, the employer may cut a part of the salary of the employees to include them in the group life insurance schemes (GLIS).
A non-contributory group life insurance scheme is one in which the covered members do not pay anything to get benefits of insurance cover. For instance, an employer footing the entire cost of premium for all its employees is an example of a non-contributory group life insurance plan.
Features of Group Life Insurance Schemes:
Master certificate/member certificate - Usually the employer is the buyer of the group policy cover and hence retains the master copy of the policy. Members of the group are provided with a certificate of insurance. Like individual policies, the members can designate a nominee who will be the beneficiary to receive benefits in case premature death happens.
Affordability-The group life insurance covers are less costly than individual life insurance covers and hence are popular among employers to offer a security umbrella to their employees. Even those who cannot afford insurance can be insured for a nominal sum under GLIS if they become members of a group that provides insurance cover.
Acts as an incentive-While the employer, by providing the group life insurance cover, makes it attractive for the employee to work under him, sometimes the GLIS acts as an incentive for people to subscribe to various offers. Banks for example, are known to club group life insurance schemes into their fixed or savings account products to attract depositors.
Security net for all the members-Life insurance can be costly and insurers decide a premium on a case to case basis. Sometimes past medical history and lifestyle of an individual may result in him being denied insurance cover. Group life insurance scheme, on the other hand, provides for all group members just by their group membership.
Convertibility-Though group life insurance cover ceases to operate with termination of employment, it can be converted into an individual life insurance cover, albeit at a higher cost if the insurer so wishes. But the discounted rate at which the group life insurance plan was available will not apply once he/she ceases to be member of the group.
Aam Aadmi Bima Yojana (AABY) —Social Security For The Poor:
The Central Government in association with public sector insurer Life Insurance Corporation of India from January 2013 has introduced a scheme called Aam Aadmi Bima Yojana (AABY). AABY is a form of social security net by extending life insurance to even the below-poverty line (BPL) people. Under the AABY, the group member is usually one earning member or the chief family member of families below poverty line or marginally above the poverty line.
For a sum assured of Rs. 30,000, the members have to pay a nominal premium of Rs.200/- per annum. Out of this amount, half will come from the Social Security Fund set up by the Government of India. The State Government/ Union Territory will bear the remaining 50% premium in case of rural landless households. The State Government/ Union Territory and/or the nodal agency and/or member will bear remaining 50% in case of other occupational groups.
Even the list of documents accepted as age proof has been expanded so as to include ration card, extracts from birth register/ voter’s list/ school certificate or Aadhar card. Since the BPL category is too poor to afford life insurance, this is a non-contributory scheme with the premium directly paid from subsidies.
The basic idea is to provide some social security cover to poor citizens and extend life insurance benefits to their families.
Various Group Life Insurance Products:
Here are some popular group life insurance schemes from leading insurers in India:
The group life insurance schemes from Bajaj Allianz are the following:
- Bajaj Allianz Life Jan Suraksha Yojna
- Bajaj Allianz Life Pradhan Mantri Jeevan Jyoti Bima Yojna
- Group Income Protection Plan
- Bajaj Allianz Life Group Term Life Plan
- Group Employee Care Plan
- Group Employee Benefit Plan
- Group Term Care Plan
- Group Superannuation Secure Plan
- Group Annuity Plan
- Group Credit Protection Plus Plan
- Bajaj Allianz Life Super Gain Group Superannuation Scheme
- Bajaj Allianz Life Group Sampoorna Suraksha Kavach
SBI Life provides several group life insurance products to its customers:
- SBI Life - Kalyan ULIP Plus
- SBI Life - CapAssure Gold
- SBI Life - Gaurav Jeevan
- SBI Life - Pradhan Mantri Jeevan Jyoti Bima Yojana
- SBI Life - Sampoorn Suraksha
- SBI Life - Swarna Jeevan
- SBI Life - RiNn Raksha
- SBI Life - Grameen Shakti
- SBI Life - Grameen Super Suraksha
Public sector insurer, Life Insurance Corporation of India, has multiple plans for group life insurance:
- LIC’s Group Credit Life Insurance
- LIC’s New Group Leave Encashment Plan
- LIC’s Single Premium Group Insurance
- LIC’s New Group Superannuation Cash Accumulation Plan
- LIC’s New Group Gratuity Cash Accumulation Plan
- LIC’s New One Year Renewable Group Term Assurance Plan I
- LIC’s New One Year Renewable Group Term Assurance Plan II
- Aam Admi Bima Yojana - Social Security Scheme
ICICI Prudential Life Insurance:
The group life insurance plans from ICICI Prudential are the following:
- ICICI Pru Loan Protect
- ICICI Pru Loan Protect Plus
- ICICI Pru Group Term Plus
- Group Gratuity Plan
- Group Superannuation Plan
- Group Leave Encashment Plan
- Group Immediate Annuity Plan
Comparing Group Insurance Plans:
A number of insurers, both public and private sector in India, offer group life insurance schemes. In order to zero in on the best and most affordable group life insurance plan from several insurers, you may choose a third party website such as BankBazaar.com, compare and choose the best group life insurance plan for you.
Group life insurance scheme is a low-cost life insurance solution for groups that extends the benefits of insurance to all members. Though popular among employers, these could also work as a social security net for extremely economically deprived populations and extend life insurance benefits to them.
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