In today’s fast-paced work environment, organisations increasingly prioritise the well-being of their employees, and a group term life insurance for employees is a key initiative to ensure this. An employer-employee
term insurance scheme is a life insurance policy purchased by employers to provide financial security to their employees’ families in case of an unforeseen demise. This cost-effective approach benefits both parties, promoting employee loyalty and satisfaction while fulfilling organisational responsibilities. Here is a comprehensive overview of this scheme, its features, benefits, application process, and its overall significance.
Key features of employer-employee term insurance scheme
An employer-employee term insurance scheme is specifically designed to protect employees and their dependents by offering life cover. Below are its key features:
Group coverage:
Provides life insurance coverage to all eligible employees under a single policy.
Customisable plans:
Employers can tailor the coverage amount and benefits to align with the organisation's requirements and employee roles.
Affordable premiums:
Premiums are significantly lower than individual policies as they are distributed across the group.
Tax benefits:
Employers can claim deductions under Section 37(1) of the Income Tax Act, 1961, while employees’ benefits are often tax-free.
No medical checks:
Most plans do not require individual medical examinations, simplifying the onboarding process.
Flexibility in contributions:
Employers can choose to fully fund the premiums or share the cost with employees.
Key benefits of employer-employee term insurance scheme
This scheme offers numerous advantages, making it an attractive proposition for both employers and employees:
Financial security:
Provides peace of mind by ensuring financial support for employees’ families in unfortunate circumstances.
Improved employee morale:
Employees feel valued and cared for, leading to higher job satisfaction and loyalty.
Ease of administration:
Managing a single group policy is simpler than overseeing multiple individual policies.
Enhanced employer branding:
Demonstrates the company’s commitment to employee welfare, boosting its reputation.
Comprehensive coverage:
May include optional riders such as accidental death or critical illness benefits for enhanced protection.
Tax efficiency:
Benefits the organisation with tax savings and offers tax-exempt payouts to employees.
How to apply for employer-employee term insurance scheme?
Applying for a
group term insurance scheme involves simple steps to ensure seamless coverage for all employees:
Evaluate needs:
Assess the number of employees and desired coverage levels.
Choose a provider:
Research and select an insurance company offering competitive rates and benefits.
Customise the policy:
Work with the insurer to tailor coverage, riders, and premium structures.
Submit documentation:
Provide necessary documents, including employee details and business registration proof.
Policy issuance:
Once the application is reviewed and approved, the group policy is issued.
Periodic updates:
Update the policy as new employees join or existing employees exit the organisation.
Importance of reviewing the employer-employee term insurance periodically
Regularly reviewing the term insurance scheme ensures it continues to meet organisational and employee needs effectively:
Adaptation to workforce changes:
Modify coverage as the workforce grows or shrinks.
Alignment with market trends:
Incorporate new features or riders available in the insurance market.
Enhanced benefits:
Ensure the policy remains competitive to retain and attract talent.
Cost optimisation:
Identify opportunities to renegotiate premiums for better cost efficiency.
Compliance check:
Stay updated on regulatory changes to maintain compliance.
Is it mandatory for all organisations to avail employer-employee term insurance scheme?
While it is not legally mandatory for organisations to provide this scheme, many do so voluntarily due to the benefits it offers.
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.
Conclusion
The employer-employee term insurance scheme is a win-win initiative that strengthens the employer-employee relationship while providing financial security to employees and their families. Organisations offering such benefits not only safeguard their workforce but also enhance their credibility and attractiveness in the competitive job market. By regularly reviewing and optimising the scheme, businesses can ensure sustained relevance and value. A well-implemented group term life insurance policy fosters trust, loyalty, and a sense of mutual responsibility, making it an indispensable aspect of modern employee benefit programmes.
