Life insurance is an essential component of one’s financial cushion. However, owning life insurance and having a sufficient one are two separate challenges.
Similarly, when you join a reputed organization, you will have an additional perk apart from availing your monthly salary. That is being part of group life insurance where the employer guarantees the life insured and their family with family aid at the time of need.
Now, some might think how nice the organization is to make sure that their employees are having a safe sail in the company. We agree that it is a perk because the organization is taking care of the employee but helping them out in the possible economic crunches one might confront in life by providing them with group life insurance.
- But, is the group life insurance enough to cover all your needs and requirements?
- Do they give the power to increase the coverage and customization?
These are some of the usual dilemmas people face when looking at this perk more detailedly. Therefore, this blog will help the reading ones to understand and learn about,
- What is Group Insurance?
- Different Kinds of Group Insurances in India
- What is Group Life Insurance and the benefits associated with it?
- What are the advantages and disadvantages of having group life insurance?
It might look like a complex road, but trust us, it will all be worth it once you understand, as it will give a clearer picture of insurance and the need to buy secondary insurance along with group life insurance.
What is Group Insurance?
Group insurance protects a specific group of people, such as members of a professional association, a society, or company workers. Group insurance takes place between two types of groups, and they are:
- Informal Group
- Formal Group
Group insurance is wisely crafted to satisfy the insurance needs of specialized groups such as professionals, employers-employees, co-operative companies, and others.
As the name suggests, group insurance is where a group of people is included under a single type of plan. The group is free from age, socioeconomic status, gender, hierarchy in the job, years of experience, and other factors of differentiation.
Group insurance offers various advantages and comes with Riders (additional benefits at an extra price) that can be used to make your plan more comprehensive.
What is group Life Insurance and its benefits?
Life insurance is a huge tree with many fruits. Similarly, group life insurance is also a significant branch with four sub-branches, and group life insurance is among them. As the name implies, group life insurance provides life insurance coverage to the concerned group of people. Now, the number of people in the group can vary depending on the plan purchased from the insurance company. It mainly includes an organization and holds more of the employee-employer group.
In a group life insurance, you have a master contract held by the policy buyer, who can be the employer or an entity such as an association or trust. In contrast, policy members are given coverage certificates as policyholders/life insured.
However, group life insurance also holds groups from banks, professional groups, non-employee-employer, non-governmental organizations, and other financial institutions.
Some of the features of being part of a group life insurance are:
- Availing death benefit when the life insured meets with death while the plan is active.
- If the life insured faces total or permanent disability
- Have riders make the plan more extensive.
The benefits of group life insurance are as follows:
- It includes basic coverage that is normally once or twice the group member’s wage.
- It is affordable and pocket-friendly for the employer.
- It is accessible to employees at a very affordable premium charge.
- At times the user has the leverage to customize their group life insurance with the help of riders and other optional benefits (if the insurance company has weaved such perks in the plan).
- It assists the company or organization in accumulating gratuity cash for their employees.
- It does not necessitate that members undergo a health examination before being a part of the group insurance policy of the organization.
What are the types of Group Insurances?
After understanding the perks of group life insurance, let us go through the other three types of group insurance available in India. They are as follows:
Group health insurance is a part of a group insurance plan that covers the healthcare of all members in the group. It covers medical expenses such as illness and accident hospitalization, ambulance costs, and daycare operations, among other things.
Group travel insurance safeguards the group members traveling to national or international places together against unforeseen medical or non-medical contingencies. Medical expenditures, personal accidents, luggage loss, passport loss, personal liability, aircraft delays, trip slowdowns, and cancellations are all covered. This form of group insurance scheme’s coverage begins as soon as the trip starts and terminates until the group members return home.
Group personal accident insurance is where it defends the cost of the group members if they meet with an accident that kills or disables them. It compensates the policyholder when suffering from permanent total/partial disability as well as temporary total incapacity.
What are the Pros and Cons of Group Life Insurance
- Obtaining coverage via your employer might be pretty straightforward. The paperwork is frequently included in your employment agreements, and HR staff is usually available to address inquiries.
- The base coverage at work is commonly provided at no cost to the employee, making it easy to obtain a limited level of coverage at no expense to you.
- There is no need for the user to perform any medical tests because one can avail of this type of insurance without any medical buffer. It makes it easier to apply and get because there are not many checks and balances.
- There might be specific plans that come with riders. One can put in some extra premium cost to avail of those benefits as it helps make your insurance bubble more secure.
- The price for group life insurance is relatively low and very inexpensive. However, the coverage is restricted, necessitating the purchase of an additional insurance policy. You may make the most of your investment by selecting the best individual insurance plan.
- The group life insurance provided by your organization doesn’t need to cover your family (check for the members covered in the family).
- The group plan terminates when you leave the organization. And the reason for leaving the organization can vary, and it might also mean going unemployed for several months or years. It deprives one of insurance, leisure and security.
- Not every group life insurance empowers the user with customization of the plan.
Why is Group Life Insurance Not Enough?
For instance, you plan to leave the organization, do you think you can continue with the insurance plan? Usually, if you leave your job, you will lose the life insurance provided as a perk of the position. You may have the leverage to convert your group coverage to an individual policy on your way out. As a result, it’s critical to keep track of your insurance security. Always keep in mind that you are ultimately answerable for your monetary well-being. And, blindly depending on your firm to do everything may not be in your best interests.
Having group life insurance doesn’t ensure every perk in life. As it is a pocket-friendly insurance type, they are not so extensive or comprehensive nor offer a broader coverage because the plan lies in the employer’s interest and not the employee’s. If the plan provides death benefits, they don’t need to be accompanied by accidental pay-offs to support your medical expenses. Therefore, it is always advised to have secondary insurance that will work according to your needs and requirements.
Other than quitting the job, you can resign from your job to achieve your future aim or anything, and when you pursue other things, your insurance will get hampered. Having dedicated individual insurance is mandatory as it stays until your death.
Group insurance is a win-win deal that comes with a bundle of a perk for both employee and employer. The employer offers the ultimate master plan based on the risk factors they have to face. Even though you are part of a group, you are an individual who earns to fulfill their dreams and gift a decent life for their family.
When in group life insurance, both the factors get compromised.
Do you still think that a primary group insurance plan will be enough? The choice is yours because it’s your life, and you have to bear the repercussions.