Most of the companies offer group term life insurance policies to their employees. The policy ensures that even after the death of the employee, his/her family’s future is secure.
At the time of buying group term life insurance, the insurer takes into account all the current employees, in case, more employees join the organisation, the following conditions will be applied in respect of group term life insurance –
- All those new employees who satisfy the eligibility criteria are covered under group term life insurance
- The group term life insurance cover will start from the date the name of the employee is entered in the company’s register, and the same is communicated to the group term insurance company
- If an employee enters the group term life insurance scheme between the two annual renewal dates, it is necessary for the employer to submit the particulars of the same to the group term life insurance company on a monthly basis
In order to extend group term life insurance coverage to new employees, it is necessary for the employer to pay the proportionate premium for the remaining part of the policy year
Once the new employee is also covered under a group term life insurance policy, it is the duty of the company to inform him/her about the insurance benefits and give policy document. Once all the detail about the employee is received by the group term life insurance company, a policy ID card is issued to him/her which can be used to avail cashless treatment at network hospitals.
Here it is important to note that some companies offer different sum assured to its employees on the basis of their salary and job profile. It means, if a company has both manual labour and white-collar office employees, the company can go for separate group term life insurance coverage for both of them on the basis of their salary and job profile.
Since 1999, L.K Construction has become a reputable name in the industry. In addition to offering various benefits, the company is also offering group term life insurance to its employees. As the company has both manual and white-collar employees, it has bought separate group term life insurance coverage for both the categories from the one insurance company.
While one coverage was of Rs 10 lakh, the other was of Rs 50 lakh.
At the time of buying the group term life insurance, the company had 100 employees, which has now increased to 220.
Whenever a new employee joins the organisation, its HR department informs the insurance company. Last year, ten new employees joined the company, and the HR division informed the group term life insurance company about them. In this case, two employees were belonged to top management team. As they all were eligible to be covered under the group term life insurance policy, the insurer agreed to cover them and asked for the details, like name, salary, age, nominee details, etc.
As two employees were from top management, their group term life insurance coverage was different from what was offered to the rest of 8 employees who were manual labors. Here the coverage extended to two employees was more than the rest of other employees.
Also, as L.K Construction was covering new employees under a group term life insurance, the company also paid an extra insurance premium which was proportionately computed for the remaining policy tenure. As group term life insurance coverage extended to two employees was more than the rest of the employees, L.K Construction had to pay a higher premium for them as compared to what it paid for the rest of the employees.
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