In summary

An employer-employee term insurance plan provides life cover to eligible employees through a group life insurance policy arranged by the employer.

• Group cover: Eligible employees receive life cover under one employer arranged policy.
• Premium: The employer may pay the full premium, or employees may contribute under the scheme's payment structure.
• Protection: The applicable death cover can provide financial support to the nominee when a covered event occurs.

Eligibility, sum assured, premium contribution and continuation of cover after leaving the organisation depend on the group policy. IRDAI permits group term insurance products for employer employee groups, including one year renewable group term insurance products.

Here are the key features:

• Group life cover: Eligible employees receive life cover under the employer’s group policy.
• Defined eligibility: The employer and insurer determine who can join the scheme and the conditions for coverage.
• Specified sum assured: The life cover amount is defined for each eligible employee according to the scheme rules.
• Employer or shared contribution: The employer may pay the premium, or the scheme may specify a contribution structure for employees.
• Additional benefits: Depending on the product, the scheme may include riders or additional benefits such as accidental death cover.
• Policy administration: The employer acts as the master policyholder and provides employee details required for the scheme.

• Tax benefits: Employers may claim the premium as a business expense under the Income Tax Act 2025, subject to conditions. The tax treatment in the employee's hands depends on the policy structure and the applicable rules.

  
  

IRDAI permits group term insurance products for employer employee groups, including one year renewable group term insurance products.

Note: Tax laws are subject to change. BFL does not provide Tax/Investment advisory services. Please consult your advisers

For employees, the key benefits may include:

• Financial support for dependants: The applicable death cover can provide funds to the nominee when a covered event occurs.
• Group based cover: Employees can receive cover through a single group arrangement rather than each employee having a separate employer arranged policy.
• Additional protection: Some group products can include benefits such as accidental death cover, depending on the scheme.
• Employer supported benefit: Where the employer funds the premium, the employee may receive the group cover without paying the full premium personally.
• Structured administration: Employee additions, exits and other membership changes can be managed through the group policy.

The actual benefits vary by the group policy. Employees should check their certificate of insurance and policy terms to know the applicable sum assured, exclusions and cover period.

An organisation can generally get the plan by first identifying its employee group term insurance and required level of cover, then discussing the available group insurance structure with a life insurer.

The process can include:

1. Identify eligible employees: Decide which employee groups will be covered under the scheme.
2. Set the cover structure: Define the sum assured, eligibility conditions and policy term.
3. Review available benefits: Check whether additional benefits or riders are suitable for the employee group.
4. Submit employee details: Provide the information required by the insurer for policy issuance.
5. Complete policy issuance: The insurer issues the group policy after reviewing the proposal and completing the required process.
6. Update membership: Inform the insurer about eligible employees joining or leaving the group as required under the policy.

IRDAI’s group insurance framework recognises employer employee group term insurance and sets provisions for such group products.

It generally covers:

• Existing employees: Employees who meet the scheme's eligibility conditions can be enrolled under the group policy.
• New employees: Employees joining after the policy starts may be added when they become eligible under the scheme.
• Active employees: Some group policies require the employee to be actively at work when cover begins. Medical underwriting may apply in specific cases. 

• Age limits: The permitted age varies by policy. For example, one IRDAI filed group term policy allowed employer employees aged 18 to 79 years, subject to its conditions. This should not be treated as a universal age limit for all group term plans. 

  
  

The exact eligibility, cover amount and joining conditions depend on the employer's group term insurance policy. IRDAI's current life insurance product framework specifically permits group term insurance products for employer employee groups.

An employer should review the group term insurance when there are significant changes in the workforce, cover requirements or policy structure. A review can check whether the sum assured, eligible employee groups, premium arrangement and additional benefits still match the organisation’s requirements.

For example, if an organisation expands from 100 to 250 employees, it may need to update the insured member details and review whether the existing scheme continues to cover the eligible workforce. Changes in employee entry and exit should also be handled according to the policy process.

Regular reviews can also help the employer identify changes in applicable insurance regulations and policy conditions.

• Voluntary adoption: It is widely adopted by organisations as part of employee welfare programmes.
• Industry-specific norms: Some industries may strongly recommend it to enhance workforce satisfaction.
• Legal exceptions: Certain laws may mandate basic coverage in hazardous or high-risk occupations.
• Competitive advantage: Offering term insurance boosts an organisation’s appeal as an employer of choice.
• Ethical responsibility: Many organisations consider it a moral obligation to ensure their employees’ financial security.

An employer employee term insurance plan provides group life cover to eligible employees through an employer arranged policy. The cover amount, eligibility, premium structure and additional benefits depend on the group policy.

For employees with dependants, group life cover can provide an additional layer of financial protection. Employers should review the scheme periodically and keep employee membership details updated so that the policy continues to reflect the organisation’s requirements.