Group Term Life Insurance

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The meaning of Life Insurance means that it covers an individual and the individual takes it by themselves. The primary goal of this cover is to provide a measure of financial security to the policyholder’s family in case of the holder’s demise. Besides this, there may be several other riders and clauses added to the policy depending on the holder’s requirement.

There are two ways to buy life insurance:

  • Personal Life Insurance
  • Group Life Insurance

To understand life insurance, you need to understand the principles on which life policies are based:


The premium of Life Insurance policies is decided based on the risk on the life of the proposer. For example, the cost of insuring a person working in high-risk industries like mining, explosives, etc. is going to be higher than for those working as administrative staff in a school. Similarly, the premium may differ for people of different ages, sex, and lifestyle (smoking and drinking habits).

A Case of Life Insurance Cover

Sachal Gupta aged 35 years, is living in Mumbai with this wife, Mira Gupta, and 2 children. He is working as an aircraft pilot with a leading cargo airline and his wife is an HR specialist in an MNC. While Mr. Gupta already has a Group life insurance cover of Rs. 25 lacs from his firm, he wants a personal life insurance cover worth Rs. 1 cr. as well, since the employer’s cover will not be enough for his family.

Due to the nature of his job, the insurer is charging a 10% extra premium to provide him with the cover. While enquiring about his wife he finds that her insurance policy will be approximately 20% cheaper than his. But as the advisor explains to him the risk to their lives due to the nature of their jobs, Sachal agrees to the policy.

While completing the proposal form Sachal and Mira find out, they need to go through a medical test as well. Done by a lab and doctor authorized by the insurer. They also need to disclose much information about their lifestyle and hobbies.

As the advisor explains that this is done to avoid any wrong selection of life insured which will be detrimental to all other less risky insured lives.