A Group term life insurance policy is a policy that provides life insurance coverage to a group of people. The employers or any other group administrator can subscribe to it to cover the lives of its employees or members. The group term insurance policy provides financial support to the family members of the employee in case of his/her unfortunate death. So, it provides monetary security to the beneficiaries of the policy.
Most of the group life insurances are simple and flexible. There is also no need to undergo a medical examination by the employees to cover under this policy. The amount of cover available to an employee under the group term insurance plan can be based upon various factors, like:
- The rank of the employee,
- The employment tenure with the company,
- Amount of salary drawn,
- A number of dependents, etc.
The employer pays for the coverage up to a certain extent. And the employee needs to pay himself if he needs extended coverage. The coverage of the group policy is available to the employee until his continuity of the job with the company or the expiry of the coverage. Also, there are no maturity benefits of these policies.
Case for Group Term Life Insurance
Rahul Jain, 49 years, Director IT with XYZ Software Pvt. Ltd. for the last 10 years has been very careless in managing his finances. But, he along with his wife and the two kids have been leading a very good life by God’s grace.
One fine day when he was busy with his routine work, he experienced acute pain in his chest and passed out. He has declared brought dead by the hospital by the time ambulance delivered him to the care.
This was a very sad and panicky situation for him and his family. He had not left save sufficient amount that would help his family to survive independently after him. At this moment, his spouse was approached by the life insurance company which had provided the group term life insurance cover to the organization and offered a tax-exempt amount of Rs. 1.5 cr.
The Jain family could look after themselves and maintain their lifestyle due to the group term insurance plan that his company has taken for the employees. This was a big relief for him as the policy was providing reasonable coverage. Thus helping his family financially after his demise.
Also, his colleagues at the organization were also relieved to know that Rahul’s family members could spend their lives with dignity despite the untimely demise of their colleague.