What Is Group Insurance Scheme?
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What is Group Insurance?

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  • 24th Sep 2018
  • 4,994

What is Group Insurance?

Depending on where you work, you may be offered health or life insurance by your employer. Generally, you can avail of this cover for a minimal cost, and you may share the cost of premiums with your company. These type of policies, are known as group insurance policies.

What is Group Insurance?

As the name suggests, group insurance covers a whole group of individuals, instead of just a single person. Generally, companies purchase group insurance for their employees. Typically, group members can avail of such cover for a discounted cost, as the insurer’s actual risk is spread across all the individuals covered by the policy. Since the group insurance definition refers to any group, members of a society or professional association can also opt for group cover.

Advantages of Group Insurance

Undeniably, the biggest benefit of group insurance is that it offers cover to all members of the group, irrespective of their gender, age, profession and socio-economic background. Here’s what group insurance offers to the individuals:

Life Cover

– More specifically, group insurance will offer term insurance life cover to individual members of the group. During the tenure of the plan, which is typically the time that an employee working with the company offering insurance, if something were to happen to an insured individual, their nominee or family members will receive the sum assured as a payout.

Annuity

– Several employers offer retirement or pension plans to all the employees. Such a group insurance policy is generally referred to as a superannuation scheme. These plans offer some financial security to the individuals once they retire.

Gratuity

– Generally, once an individual completes 5 years at an organisation, they become eligible to collect gratuity. Group insurance providers can offer companies that provide gratuity with investment opportunities. Through these investments, the company is able to build up a corpus for gratuity.

Savings

Group insurance policies can also help in mobilising the savings of an insured individual. Participating members can use this insurance to help meet their long-term goals such as paying for their child’s education.

Liability Cover

– Most importantly, these plans can be used to cover an insured individual’s liability. If an accident were to render an individual disabled or worse, the insurance policy can help clear their outstanding loan payments and other dues.

While most people get hung up on the group insurance meaning or definition, they often forget that these plans can offer so much more than basic life or health cover. Remember, healthy and safe employees are happy employees.

- A Consumer Education Initiative series by Kotak Life

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