Group term life insurance is a type of life insurance which can be taken by both the formal groups as well as informal groups. Formal groups are those which have employee-employer relationship and informal groups are those which have non-employer-employee relationship. There are many benefits of group term life insurance policy such as the no pre policy medical checkup at the time of policy issuance, low premium with high coverage etc. which are mentioned in detail below:
No medicals: Group term life insurance doesn’t require pre-policy medical checkups. The policy would be issued any medical checkups and it would benefit the employees availing the group term life insurance. Employees with adverse health conditions would also be covered under the group term life insurance. High coverage under the group term life insurance without the requirement for pre policy medical checkups unlike the individual term life insurance policies where the medical tests would be mandatory for even minimum coverage. The minimum entry age for the group term life insurance policy would be 18 years and the maximum entry age would be 70 years in a few cases.
Low premiums: The premiums payable under the group term life insurance would be very low when compared to the individual term life insurance policies. Group term life insurance provides high coverage at affordable premiums. The premium under the group term insurance would be decided based on many factors such as the age of the members, sum assured required, addons selected etc. The group life insurance policy is usually given for a period of 1 year after which it can be renewed with the same insurance company or different insurance company. The premiums payable are not constant in the group life insurance unlike the individual life insurance where the premium payable would be constant throughout the policy term. In case of group life insurance the premium would be varied every year depending on many factors as mentioned above.
Reduced attrition levels: The other major benefit of group life insurance policy is the reduction in attrition levels of employees. The attrition levels of employees can be reduced by increasing the employee benefits and insurance is one of the most required employee benefits that could be offered to the employees. Group term life insurance cannot be extended to cover the family members of the employees unlike the group health insurance. Only the employees associated with an organization can be covered under the group life insurance policy.
Tax benefits: The group term life insurance policy offers tax benefits to the employers. In addition to this the claim proceedings obtained from the group life insurance policy are exempted from tax under Section 10(10D) of the Income tax act, 1961. The proceedings from the death claim would be completely expected from the income tax purview and it would benefit the nominee of the employee. The claim proceedings from the group life insurance policy can be availed as lump sum or in installments with increasing amounts each year.
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