Looking to secure your team’s future and offer a meaningful benefit that goes beyond just salaries? Group term insurance is one of the simplest, most cost-effective ways to protect employees and their families — while also adding long-term value to your organisation.
Whether you're an employer considering this benefit or an employee curious about your eligibility, this guide will help you understand who qualifies, how it works, and why it matters.
Eligibility criteria for group term insurance
Group term insurance is designed for organisations or associations that want to extend life insurance coverage to a group of members under a single, simplified policy. But who exactly qualifies?
Here’s what determines your eligibility:
- Employee status: Only full-time employees of a registered organisation are typically eligible. Part-time staff, interns, or consultants may not always be included — but some custom plans do allow for flexible additions.
- Minimum group size: Most insurers require a minimum of 10 employees to initiate group term insurance coverage. Larger groups usually enjoy better rates and broader features.
- Age limits: Generally, employees aged 18 to 60 years are eligible. Some insurers may extend the age limit up to 65 or even 70 with specific terms.
- Medical underwriting: One major benefit? No individual medical tests for most standard group term policies. Only higher-risk cases or enhanced coverage requests might need underwriting.
- Premium payment: The employer usually pays the premium. However, employees may opt to top-up their cover by contributing a portion — offering more flexibility.
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Key benefits of getting group term insurance
Offering group term insurance isn't just a checkbox on a benefits list — it's a powerful gesture of care and commitment. Here's how it delivers value across the board:
- Affordable premiums: Because the risk is spread across the group, group term insurance plans come with lower premium rates than individual life insurance — making it budget-friendly for employers.
- Financial security for employees: Employees feel more secure knowing their families are protected. This coverage provides immediate support in case of life’s uncertainties, boosting trust and loyalty.
- No medical check-ups: Most employees are covered without the need for health screenings — making enrolment seamless and inclusive.
- Tax benefits: Employers who provide group term insurance coverage to their employees can claim tax deductions under Section 80C of the Income Tax Act. Employees also benefit from tax exemptions on the premiums paid.
- Customisation options: Employers can offer customisation options in the coverage, including adding riders like accidental death cover, critical illness cover, or disability benefits to suit the needs of their employees.
How to apply for group term insurance?
The process of applying for group term insurance is generally straightforward, but certain steps need to be followed to ensure a smooth enrolment. Here’s how employers and employees can apply:
Employer's role:
The employer typically liaises with the insurance provider to purchase the group term insurance policy. The employer will provide the insurer with details about the employees, including age, number, and sometimes salary information, to calculate the premium.
Employee enrolment:
Employees are enrolled based on the criteria set by the employer. In many cases, employees can choose the level of coverage they wish to avail, though the basic coverage is usually provided by the employer.
Required documents:
Employers need to submit certain documents to the insurance provider, such as the company’s registration details, employee list, and any additional medical information if required.
Premium payment:
Premium payments are usually handled by the employer. However, employees can sometimes opt to increase their coverage by contributing to the premium payment.
Policy issuance:
Once the insurance provider has all the necessary details, they will issue the group term insurance policy. Employees will receive a policy certificate indicating the coverage amount and any additional benefits.
Conclusion
Group term insurance is a valuable benefit for both employers and employees in India. It offers affordable premiums, extensive coverage, and peace of mind to employees, knowing their families will be financially protected in the event of an unfortunate incident. Employers benefit by offering a cost-effective and attractive employee benefit that fosters loyalty and job satisfaction. Understanding the eligibility criteria, benefits, and application process is essential for making the most of this coverage. Group term insurance is an essential tool for ensuring financial security, especially in a fast-paced world where uncertainties are common.
