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Group Insurance Plans
Group Insurance Plans are comprehensive insurance solutions designed to cover a collective group of individuals, such as employees in a company or members of a family, under a single policy. These plans offer uniform coverage benefits to all members of the group, irrespective of individual characteristics like age, gender, or socioeconomic status. Group Insurance Plans in India encompass various types such as health, life, travel, and accident insurance, catering to the diverse needs of the group members. These plans not only provide a cost-effective insurance solution but also enhance loyalty and security within the group, making them an attractive option for both employers and families.
What Are Group Insurance Plans?
As the name suggests, group insurance is a type of insurance plan that offers coverage to a group of individuals under one plan. These plans provide uniform coverage to all members of that group regardless of their age, gender, socio-economic status and occupation.
IRDAI defines a group as a cluster of individuals who come together to fulfil a common economic or social goal. Thus, a group health insurance policy covers the medical and health expenses of each individual in that particular group.
Often, employees can become a part of group insurance as payout benefits from their respective companies. Also, you can purchase a group insurance policy and enrol your family members like spouse, children and parents in it. Opting for group insurance eliminates the hassle of buying separate individual insurance plans for each member of your family or group.
Key Features of Group Insurance Policy
Following are some noteworthy features of group insurance plans for families and employees:
- A group insurance policy will cover you as long as you are a part of that particular group.
- The admin or person who is buying a group insurance plan will get a master policy as a part of the purchased group insurance.
- Group insurance provides the same coverage to every member of that group regardless of its size.
- With group insurance, you will receive standard coverage for all members of your specific group at competitive premium rates.
- All insured members of a group health insurance policy can enjoy its tax benefits*.
- You can purchase a group insurance plan in any form to fulfil different requirements. These are group health insurance, group travel insurance, group COVID insurance and group personal accident insurance among many more.
Types of Group Insurance Plans in India
Group Health Insurance
Group health insurance works like a regular health insurance plan covering the medical and health expenses of every enrolled member. Group plans provide coverage with the same sum insured to every member of that group irrespective of their age, sex or health conditions.
With group health insurance policies for employees, the plans not only provide coverage to the employer and employees but also cover employees' family members under the benefits.
Group Term Life Insurance
Sometimes, employers purchase group term life insurance plans to cover key employees and their families in the event of the employee's death. Employers usually purchase a basic group term life insurance plan for employees as a part of their benefits package. Certain group-term life insurance plans also allow you to buy additional coverage for your family members under the same plan.
However, when an employee leaves that particular job, they might need to convert this insurance policy to an individual life insurance plan. It is important to note that, in this process, the cost of this plan might go up.
Group Travel Insurance
With group travel insurance, insured individuals will receive financial coverage for any form of loss while travelling. This can include loss or damage of documents, baggage or flight delay and cancellation. Often, employers can purchase this plan to cover employee’s holiday or business-related travel as a part of their compensation package.
Group Personal Accident Insurance
A group personal accident insurance policy covers the medical expenses of the insured in case of any death or disablement caused by an accident. You can purchase this policy for a small group like a nuclear family or a larger group like an office.
Group COVID Insurance
A group COVID insurance provides coverage to you and your enrolled family members for expenses that come with Covid-19. After the outbreak of COVID-19, the Government of India made it mandatory for companies to provide coverage against the pandemic.
Types of Groups That Are Covered under Group Insurance
Groups that can opt for group insurance plans can be broadly classified into the following:
Formal Groups (Employers & Employees)
A formal group mainly includes an employer and a team of employees who work with the former. It is usually a gathering of individuals who report to the employer under the rules of the company. Employees and employers of companies, professional organisations, and businesses are examples of formal groups.
Informal Groups
Members of cultural organisations and society make up informal groups. The admin, or group owner can purchase an insurance policy on behalf of its members regardless of the size of this group. Every member will be covered under this policy until they quit from this group.
Benefits of Group Insurance Plans
The points below will take you through the benefits of group insurance plans:
Cost-Effective Premiums in Group Insurance
The premium that each member has to pay for group insurance is comparatively lower than that of individual insurance. This reduces the investment risk of the insurer as it is spread among all insured members of a group
Family Inclusion in Group Plans
Often, a group insurance plan provides provision for existing group members to add their family members to the plan. This means that if your employer purchases such a plan for you, you can add your spouse or children to the insurance.
Simplified Enrollment for Group Members
Group members do not need to fulfil pre-requisite conditions like health check-ups to register themselves in the health insurance plan. However, for individual plans, every applicant must fulfil the terms and conditions regarding medical screening.
Uniform Coverage in Group Policies
Group insurance policies provide uniform coverage to all group members. It can be very helpful for people of lower income groups to cover their entire family under one plan.
Employer-Paid Group Insurance Benefits
Employers pay the group insurance premium on behalf of enrolled employees. By offering insurance plans as a part of the compensation package, employers can attract the best talent.
Tax Advantages of Group Insurance
All members enrolled under a group insurance plan can opt for tax benefits* for premiums paid towards this policy while filing IT returns.
Enhancing Employee Loyalty with Group Insurance
With a group insurance policy, an employer can enhance the loyalty of their employees. When an employee receives such a benefit, he/she feels valued as a part of the organisation. Thus, it assists employers in creating an employee-oriented workspace for all employees.
Factors Affecting Group Insurance Premium
The following factors tend to affect the premiums for group insurance policies:
- Employers have to pay higher premiums for professionals with high-risk jobs like healthcare workers and airline staff.
- The premium amount will increase if you add a rider or an add-on coverage to your existing plan. This will allow you to add additional features to your insurance plan based on your needs. On that note, you can reduce the number of riders to reduce the insurance cost.
- The size of your group or family will also affect the group insurance premium. To cover a vast team of employees, the buyer has to pay a higher premium than a plan to cover a small family.
- Employer and group admin's claim history will also affect their premium for group insurance. If your group has a high claim ratio, you must pay a higher premium.
- The average age of group members can also affect the premium amount for a group insurance policy. The premium of a policy will be low if the average age of that group is low.
- Insurers can consider informal groups like cultural associations as a liability and can charge higher premiums from them compared to formal groups.
Eligibility Criteria for Buying Group Insurance Plans
Here are the eligibility criteria that you must consider while opting for group insurance:
- The insured members must be full-time and active members of the group.
- The minimum age to purchase a group insurance policy is 18 years.
- The maximum age to be a member group insurance policy can vary between 60 to 80 years depending on your respective insurer’s regulations.
Note that the age criteria can vary from one insurance company to another.
Why Choose a Group Insurance Plan?
The following points will provide a clear idea regarding the need for group insurance for yourself and your family:
- Group health insurance plans help you to cover the medical requirements of yourself and your multiple members with one plan. Buyers can also customise the cover as per the requirements of individual group members. For instance, a corporate group health insurance policy's terms, conditions and coverage will be different from that of a family’s plan.
- Most group insurance policies today provide a comprehensive range of benefits and wide coverage to policyholders irrespective of the group's size.
- You have to pay comparatively lesser premiums for group insurance compared to individual plans for each member separately. Thus, a group insurance plan is economical for the finances of families with an average income while providing them with a secured financial future
FAQs on Group Insurance Plan
1 Which is the best group insurance policy?
The choice of the best insurance policy for you can depend on several factors. These include features and service quality, network hospitals and affordability of health insurance. Therefore, you must consider researching each policy before choosing the one most suitable.
2 Who is eligible for group insurance?
If you fall within the age group of 18 to 80 years and are an active member of a formal or informal group, you can avail the benefits of a health insurance plan offered by the group's leader.
3 Is it possible to customise a group insurance plan?
Yes, you can customise the group health insurance policy’s coverage to include your employees, spouse, kids and parents under one plan.
4 What is the difference between health insurance and group insurance?
A health insurance policy offers coverage to an insured individual or his/her family members enrolled with this plan. Group insurance can cover medical expenses, Covid treatment, accidents or damages during travel for a group of people.
5 What is the minimum number of members needed to purchase a group insurance policy?
IRDAI states that under one group insurance policy, you can add a minimum of 20 members to a group.
6 Why do companies prefer choosing group insurance plans?
With group insurance, a company can gain employee loyalty and help create an employee-oriented workspace. Thus, companies today are adding group insurance as among the benefits offered to employees.
7 What are the various types of group life insurance plans available?
Group term life insurance, group health insurance, group COVID Insurance, group personal accident insurance and group travel insurance are the types of group insurance plans that you can avail.
*The afore stated views are based on the current Income-tax law. Also, the customer is requested to seek tax advice from his Chartered Accountant or personal tax advisor with respect to his personal tax liabilities under the Income-tax law.
ARN - PP/05/24/11721