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GROUP TERM INSURANCE

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  • What is Group Term Insurance?

    If you have recently landed a job, chances are that your employer may be offering you a group term insurance. If you are wondering what such an insurance plan is and how it can help you, here is everything you need to know about group term plans.

    As the name suggests, group term insurance plans are term plans offered to a group of people collectively. A group term insurance plan is available for enterprises or groups having a large number of members. The insurer offers term insurance for the entire group as per the needs of the administrating team.

    As an administrator, the company or group owner has the right to add or remove any members from the group term insurance plan as per their changing needs.

    Cover offered by group term plans: Group term insurance plans are term plans with no maturity benefits. The plan offers a protective component for the member as long as the plan is active. Some group term insurance plans offer uniform cover to all members while others can offer grades in cover as per the needs of the organization concerned.

    Premium payments for group term insurance: The premiums for a group term plan are paid by the employer or the group administrator. The members to whom the group term plan is offered do not have to pay for any premium from their own pocket.

    Prerequisites for a group term plan: Group term plans do not seek any medical tests from the members to be part of the term insurance plan. The premium for group term plans are renewed annually as per the underlying terms and conditions of the plan signed between the insurer and the group administrator.

    Benefits of a group term insurance plan: A group term insurance plan offers protective cover at no costs to the policyholder. Being a term plan while there are no benefits at maturity, death benefits received by the nominee of a group term insurance policy holder are exempted from income tax under Section 10(10D) of the IT Act.

    Advantages of Employee Group Term Insurance

    Group term insurance offers a great value for both employees and employers. On the one hand, a group term insurance allows for a protective component for employees, assuring them a protection against any unfortunate mishap. This improves the working levels and the trust employees have in their employer. The employer, on the other hand, is able to retain a higher number of employees, as offering a term plan shows that they are taking care of the health needs of the employees as part of the employer’s long-term agenda.


    Group term insurance plans are not just offered by insurers to increase term insurance cover for the uninsured. It comes with a number of unique benefits for all concerned.

    Here are some of the essential benefits of a group term insurance plan.

    Life protective offering
    Group term insurance plans offer a protective cover for all employees. This means everyone from the high ranked manager to a lower ranked fresher are all covered. Some group term plans offer a uniform cover while others offer cover as per the salary profile of the individual to offer optimum insurance for all employees.

    Low premium costs
    Group term insurance plans are one of the most cost effective insurance plans. Even for the employees, the cost of group term plans are minimal as compared to the benefits on offer. With low premium costs, group term plans ensure family members and dependants of the employee are not at risk in any unfortunate eventuality.

    No financial burden on the members
    Group term insurance plans are pocket friendly for the employees, but cost nothing to the employers offer such a plan. All premium costs are taken care of by the employee or the group administrator, making such group term plans financially viable for all employees or group members.

    Option to seek additional riders for a comprehensive cover
    Group term insurance plans offer the policyholder the advantage of seeking additional riders and pay the premium of the riders from their pocket to make their insurance more comprehensive as per their personal needs.

    Various protection grades
    Group term insurance plans can be tailor made for various employee grades as per their seniority, rank, or position etc. This can ensure higher protective component to older employees as a mark of a benefit for company loyalty.

    No medical tests required
    The group members or employees do not have to undergo any medical tests to be part of a group term insurance plan. With no medical tests and extra costs, the group term plans manage to be a cost effective for the insurer.

    No taxation obligations for death benefits
    The death benefits paid on death of a policyholder of a group term plan are tax-free for the nominee of the group term policy holder.

    Difference between Individual Term Plan and Group Term Insurance
    Term insurance plans are, by far, the most popular insurance plans worldwide. With growing financial awareness, term plans are making themselves popular in India as well. Today, term plans are available for individuals and are offered by employers and group administrators as part of a group term insurance for their employees.

    If you are wondering about the difference between the two, here is what is different between an individual term plan and a group term insurance plan.

    Difference in premium payments payout: For an individual term insurance plan, the premiums are paid by the policyholders themselves. This is not the case with a group term plan. In group term insurance, the premium payments are taken care of by the group administrator or the employer offering such plans.

    Prerequisites for enrolling members: A group term insurance plan is not offered to everyone, and the insurer usually offers such plans to employer-employee groups, banks, microfinance institutions, etc, with more than 50 members on an average. Individual term plans have no such prerequisites and are available to all who fulfill the eligibility criteria of the term plan.

    Group plan terms are as per insurer-group owner: In group term insurance plans, the terms and conditions are decided by the insurer and the group administrator. The policy owner has no role in deciding the terms and conditions, unlike in an individual term plan.

    Premium for individual term plans offer tax benefits: The premium paid for an individual term insurance plan is eligible for tax deduction under section 80C. In a group term insurance plan, no premium is paid by the policyholder.

    Difference in sum assured in group and individual term plans: The sum assured can be opted as per the financial needs of an individual in an individual plan. The sum assured is usually fixed in group term plans by the policy administrator and the insurer.

    Difference between individual term plans and group term plans at a glance
    Features/Benefits Individual term plan Group term plan
    Premium payment To be made by the individual policyholder To be made by the group administrator or employer
    Availability Available for all as per eligibility criteria norms Available to professional groups or enterprises
    Terms and conditions As per terms and conditions agreed between policyholder and insurer As per terms and conditions agreed between group administrator and insurer
    Sum Assured Flexibility to choose Sum Assured Sum Assured fixed by the group administrator
    Tax benefits on premium Premium paid eligible for tax deduction under section 80C No benefits as premium is paid by group administrator

    What are the Top group Term Insurance Plans available in the market

    Group term insurance plans add value for the employers as well as the employees. It safeguards the employees from any eventuality during their working years. Today insurers offer multiple group term insurance plans available for employee-employer groups as well as other social groups.

    Here is a look at some of the well known and popular group term insurance plans currently active in the market.

    1: LIC Group Credit Life Insurance
    LIC Group Credit life insurance is a single premium term insurance group plan offering death benefits in the unfortunate event of death of the member. The plan offers a minimum Sum Assured of Rs. 40,000 with a minimum group size of 50 members. The policy term for LIC Group Credit life insurance plan is between 5 to 35 years.

    https://www.licindia.in/getattachment/Group-Schemes/Group-Scheme/Sales_Brochure_LIC_GCLI.pdf.aspx

    2: Kotak Term Group Plan
    Kotak Term Group Plan offers a lump sum benefit to the beneficiary in the event of demise of the policyholder. The plan offers a choice of preferred premium payment mode along with a voluntary cover for spouses on payment of a smaller additional premium. The basic sum assured for each member if fixed at Rs. 1000 with no upper limit making the plan ideal for all group members as per their grade and income levels.

    https://insurance.kotak.com/group-plans/group-term/kotak-term-group-plan

    3: Aegon life group term plan
    Aegon life group term plan is a popular group term insurance plan made exclusively to safeguard the financial needs of family members of the life assured. The plan offers the employer to fix the sum assured as per the member’s gross salary, as a flat or fixed cover or as a grade wise cover making the term insurance plan fully customizable for each employee. Members can be easily added or removed on a monthly basis, making the plan user friends for the group administrator or employer.

    https://www.aegonlife.com/insurance-plans/group-insurance-plans/aegon-life-group-term-plan

    4: ICICI Pru Group Term Plus
    ICICI Pru Group Term Plus offers life cover to all group members ensuring financial security for the nomine and family members of the group member. The minimum amount of life cover available under the plan is Rs. 5,000 for each member. The premiums can be paid either monthly, quarterly, half-yearly and yearly as per the financial plans of the employer or the group administrator. The employer also can avail tax deductions on the premium paid.

    https://www.iciciprulife.com/group-insurance/group-term-insurance-plan.html

    5: Future Generali Group Term Life Insurance Plan
    Future Generali Group Term Life Insurance Plan is designed exclusively for smaller and bigger groups seeking term insurance for its members. The plan offers a minimum sum assured of Rs. 5000 for a minimum group size of 25 members. The employer or group administrator has the option of adding or deleing members on a monthly basis.

    https://life.futuregenerali.in/insurance-plans/group-plans/future-generali-group-term-life-insurance-plan

    6: LIC Single Premium Group insurance
    LIC Single Premium Group insurance is a single premium term insurance group plan offering death benefits in the unfortunate event of death of the member. The plan offers a minimum Sum Assured of Rs. 5,000 with a minimum group size of 50 members. The policy term for LIC Single Premium Group insurance is between 2 to 7 years.

    https://www.licindia.in/getattachment/Group-Schemes/Group-Scheme/Sales_Brochure_LIC_SPGI.pdf.aspx

    7: PNB MetLife Group Term Life Plus
    PNB MetLife Group Term Life Plus offers group term protection individually as well as in lieu of mandatory EDLI (Employee Deposit Linked Insurance Scheme). The plan offers 100% of the sum assured in case of the unfortunate event of death. The minimum sum assured is fixed at Rs. 1000 with a one year renewable term. The plan also offers the option to convert to individual coverage when an employee leaves the organization.

    https://www.pnbmetlife.com/insurance-plans/group/group-term-life-plus.html#parentHorizontalTab

    8: Sud Life Group Term Insurance
    Star Union Dai-ichi Life Group Term Plan offers customizable protection for a group term insurance. The plan comes with simplified process with no medical test requirements up to free cover limit. The minimum sum assured for groups is Rs. 5000 per member with a maximum sum assure limit of Rs. 50 crore per member. The premium payment mode is flexible with yearly, half-yearly, quarterly or monthly payments.

    https://www.sudlife.in/insurance-plans/group-insurance/term-plans/group-term-insurance-plus-scheme

    9: HDFC Life Group Term Plan
    HDFC Life Group Term Insurance Plan is a popular group insurance plan offering sum assured to the nominee on death of the covered member. The plan offers one master policy covering all members of the group with an annually renewable premium. Employees can be additionally covered by riders including accidental, critical illness or disability. The plan also offers cover for policies issued in lieu of Employees Deposit Linked Insurance (Amendment) Scheme 2016 (EDLI)

    https://www.hdfclife.com/group-insurance-plans/group-term-insurance

    Top Group Term Insurance Plans at a glance

    Group Term Insurance Plan Name Minimum-Maximum entry age Maximum maturity age Coverage term Minimum-Maximum Sum Assured Premium payment term Premium Payment Modes Minimum Group Size
    LIC Group Credit Life Insurance 18-60 years 65 years 5 to 35 years Rs.4,00,000- No upper limit Same as policy term Single premium only 50 members
    Kotak Term Group Plan 18-74 years -- 1 year (Annually Renewable) Minimum: Rs. 1,000 Maximum: No Limit Same as policy term Annual / Half-yearly / Quarterly / Monthly 50 members- no upper limit
    Aegon life group term plan 18-59 years 60 years 1 year (Annually Renewable) Minimum: Rs. 5000 per member Maximum: Rs. 2,00,000 per member Same as policy term Annual / Half-yearly / Quarterly / Monthly 50 members- no upper limit
    ICICI Pru Group Term Plus 15-79 years -- 1 year (Annually Renewable) Minimum: Rs. 5000 per member Same as policy term Annual / Half-yearly / Quarterly / Monthly Formal group: Minimum 10 members Informal group: minimum 50 members
    Future Generali Group Term Life Insurance Plan 18-69 years 70 years 1 year (Annually Renewable) For social groups with 5000 members or above: Rs 1000/- per member.
    For other groups: Rs 5000/-.
    Same as policy term Annual / Half-yearly / Quarterly / Monthly Minimum 25 members per group
    LIC Single Premium Group insurance 18-60 years 65 years 2-7 years Rs. 5000 – Rs. 10 Lakhs Same as policy term Single premium only 50 members
    PNB MetLife Group Term Life Plus Min-Max for Employer
    Employee (EE): 18-80 years
    Min-Max for non Employer-Employee (NEE): 15-60 years
    EE : 81 years
    Non EE : 61 years
    Year renewable Term - one year Minimum Rs. 1000 per life-
    maximum as defined in the rules of the group insurance scheme under administration or as defined by the employer for employer-
    employee group and Master Policyholder for non-employer-employee group.
    Regular Annual, Semi-Annual, Quarterly, Monthly Minimum group size: 50. For gratuity Minimum group size: 10.
    Sud Life Group Term Insurance Min-Max for Employer-Employee (EE): 18-79 years Min-Max for non Employer-Employee (NEE): 18-64 years Employer-Employee-Groups:- 80 years Non Employer Employee Groups:- 65 years One year renewable For Groups other than Group Term Insurance Scheme in lieu of Employee’s Deposit Linked Insurance: Rs. 5000 per member For Group Term Insurance Scheme in lieu of Employee’s Deposit Linked Insurance: Rs. 362,000 per member Same as policy term Annual, Semi-Annual, Quarterly, Monthly For Compulsory Employer-Employee groups: 10 members Otherwise : 50 members
    HDFC Life Group Term Plan 16 years (18 years if rider is chosen)-79 years (64 years if rider is chosen) 80 years One year renewable Rs. 5000- No upper limit Same as policy term Annual, Semi-Annual, Quarterly, Monthly Employer-Employee Groups – 10 Others - 50

    What are the exclusions of group Term Insurance?
    Group term insurance plans are today offered by almost every major employer as part of a protection plan for its employees. Group term insurance plans are not only protective instruments safeguarding the life of the employees, they also come at no extra cost for the employee. All premiums are taken care of by the employer making group term insurance plans an effective protective instrument.

    Amid all the benefits offered by group term insurance plan, majority of employees do not take time out to read the terms and conditions of such a group term insurance plan. Not reading the terms and conditions means that most of the group term insurance policyholders are unaware about the possible exclusions in a group term plan. To avoid a claim denial at any stage, all inclusions and exclusions in a group term insurance plan should be read in detail.

    While the exact nature of possible exclusions in a group term insurance plan may differ from one insurer to the other as per the selected plan, here are common exclusions that are part of every group term insurance plan.

    Suicidal death is excluded in group term insurance plan: Group term insurance plan offers a protective insurance component for any sudden death of the policyholder. However the protection is limited to natural or accidental deaths only and suicidal cases are excluded under the ambit of a group term insurance plan.

    Some group term insurer limit the non coverage of suicidal deaths in the first year or first couple of years of the policy. Reading the terms and conditions of the group term insurance can reveal if the policy offers protection for such deaths after a certain number of years.

    No medical tests for group term insurance plan: Group term insurance plans do not seek any medical tests. But let’s se a scenario here. Suppose Mr. A opts for a group term plan, but is suffering from depression or any such mental condition. He is still covered for the treatments for the condition, even if it is a pre-existing disease. But if Mr. A commits suicide due to any such reason, the insurer is not bound to offer any protection to the life insured.

    Questionable death and group term insurance claims: Post death a medical certificate is needed to ascertain the cause of death of the policyholder. The insurer then conducts an in house enquiry for the same and if the death is found to be a case of self inflicted or suicidal one, the insurer can deny the claim.

    Exclusions in critical illness or accidental death benefit rider
    Group term insurance plans come with various additional covers like critical illness rider or accidental death benefit rider. If either a critical illness or accident leading to any bodily injury or death is because of any of the following circumstances, the claim is part of group term insurance exclusion and not entertained.

    • The policyholder was found to be under the influence of alcohol or drugs
    • The policyholder was involved in a deliberate hazardous activity like racing etc.
    • The policyholder was taking part in any illegal or unlawful activity.
    • The policyholder had a preexisting disease hidden from the insurer.
    • The policyholder’s death was because of any pregnancy related complications (in case of a female policyholder)

    Group term insurance exclusions at a glance
    • Read the policy document to ascertain the exact policy exclusions of a group term insurance plan.
    • Suicidal deaths or deaths by self inflicted wounds are not covered under group term insurance plans.
    • Some insurers have a limit on the number of years for exclusion for social deaths while others exclude such deaths for the entire term.
    • Death due to drunk driving or lifestyle related diseases hidden from the insurer are also excluded.
    • Death due to pregnancy related complications are also excluded from most group term insurance plans.

    What is the claim procedure for group Term Insurance

    Group term insurance is an integral part of employee benefits in most companies. It offers protection in the form of sum assured to the employee and their family in case of an unfortunate event involving the policyholder (the employee).

    Group term insurance will provide an assured lump sum to the family of the demised in case an unfortunate event. This amount can be used to cover the family’s needs like children’s education, clearing liabilities, etc in the absence of the sole breadwinner of the family.

    The employer is the master policyholder here, and the members, ie, the employees are individual policy holders with a fixed sum assured. One becomes a member just by being an employee, so no medical or health certificate is needed.

    The premium toward the same is paid by the employer either by deducting part of it from the employee’s salary or as part of the employment package.

    Claim process for group insurance policies
    The beneficiary or the family members of the demised can initiate the claim process with the employer, or with the insurance company directly.

    Most importantly, the person has to be an employee with the company that offered the scheme at the time of the event. In case he or she was not an employee of that same organization at the time of the event, then the beneficiary will get the benefit only if the policy holder had shifted the policy to his or her new company or converted it to a regular term plan.

    If the beneficiary had converted it to a regular term plan, the beneficiary can apply for claim settlement with the insurer and not the employer.

    Process for a normal death claim
    So the first thing that is checked is whether one was employed with the same employer during the event. Once that is verified, then the subsequent processes would start.

    The first step is to notify the insurer that death has occurred—this could be done by various means:

    • Through a mail or online
    • Visiting the nearest branch of the insurer
    • Calling the insurer’s 24*7 helpline and following the instructions
    • Contacting the employer’s HR or admin department

    Process of verification
    Once the claim has been registered, the following are the documents required to be submitted along with the claim form.

    • Original / Attested copy of Death Certificate Issued by local municipal authority
    • Death Claim Application Form
    • Nominee's photo identity proof like a copy of passport, PAN card, Voter identity card, Aadhaar (UID) card, etc
    • Attending Physician's Statement
    • Medical records (Admission notes, Discharge/ Death Summary, Test reports, etc)
    • NEFT Mandate form attested by bank authorities along with canceled cheque or bank account passbook
    • Employer’s confirmation

    Process in case of accidental claim
    If death is due to an accident or there is disability, which is covered by the policy, then the following documents are required additionally:

    • A copy of the First Information Report (FIR) or Panchanama/Police Complaint
    • Copy of Post Mortem Report (PMR) / Autopsy and Viscera report
    • Copy of the Final Police Investigation Report (FPIR) / Charge sheet

    In case of disability, proper reports and documents verifying the same issued by the hospital are to be provided.

    Process for critical illness
    If critical illnesses are covered in the group term plan, then the hospital and doctor records about the same are to be provided.

    Process for pay-out
    Once all these documents have been submitted, the company would verify these documents and will give a go ahead to the claim request if all information is accurate and all supporting documents have been provided. The normal time for a claim settlement is 30 days. However, if further verification is required, then the time taken could extend to 180 days.

    The amount of the claim will be deposited in the beneficiary’s account or a cheque towards will be given to the claimant.

    The process of claim for group insurance is similar to that of a usual term plan.

    Is group term insurance sufficient for an individual?
    If you have been offered a group term insurance plan by your employer, does that mean you say goodbye to an individual life insurance policy?

    Many individuals, especially those who may have just started earning often believe that a group term insurance plan offers them a security cover and they can disregard any plans of seeking an individual life insurance.

    The fact is that a group term insurance plan offered by your employer may have nothing to do with your individual life insurance needs. Here is why.

    Insufficient Sum Assured: The sum assured offered by a group term plan may not be sufficient for your individual needs. Having an independent plan offers you the benefit of having optimum insurance with sum assured that can be actually capable to take care of financial needs of your dependants and family members in any unfortunate circumstances. Having both an independent life insurance plan along with a group term insurance plan can make your protective component more comprehensive.

    Any change of jobs leaves you vulnerable: A group term insurance plan is valid only as long as you are working with the enterprise. In today’s day and age where job changes are frequent, any such change in job or time between old and new job leaves you financially vulnerable with no insurance. Having an independent plan is therefore paramount to ensure continued protection at all times. Another option is that you can convert the group term plan to an individual plan.

    No maturity benefits with group term insurance: Group term insurance plans come with no maturity benefits and if you are seeking investment cum insurance plans opting for an additional independent plan is the way to go. With various life insurance types available today, you can choose from either a unit linked plan or a traditional endowment plan as per the risk taking capacity, to ensure a comprehensive maturity benefit along with death benefits as a protective instrument.

    No taxation benefits on premium payment: An independent term insurance plan allows you as a policyholder to avail tax benefits with deductions under Section 80C of the Income Tax Act for all premiums paid during the year. Since the premiums of a group term plan are paid by your employer or group administrator, you lose out on the tax benefits on offer.

    The final word: Is group term insurance sufficient?
    If you are looking for a short answer, the answer is a comprehensive ‘No’. Group tem insurance plans have their benefits and advantages, but they cannot replace individual insurance plans. No matter how beneficial the group term insurance plan is offered to you as an employee, opt for an individual health plan as per your needs along with adequate cover to ensure your life remains protected with an optimum sum assured useful for your family and dependants.

    Can the advantage of Group Term Insurance be carried away when you leave the company?
    From advancement in career to a better and improved financial package or position, today changing jobs is a very realistic scenario. What many employers overlook in a job changing scenario are the protection benefits of a group term insurance. Any time between jobs may leave you unprotected and vulnerable unless you choose to opt for an independent life insurance cover or choose to opt for continuation of your group term insurance cover offered by the previous employer by paying the premiums from your own pocket.

    Understand the details of group term plan
    The option of carrying the benefits of a group term insurance plan even after quitting your job depends on the insurer and the group plan offered to your employer. Some group term insurance plans do not allow for such an option of carrying forward of the plan while other plans may offer such benefits. The best way is to read the policy terms and conditions at the time of singing up to know whether your insurer offers such an option or not.

    Check if your group term plan offers protection during the notification period
    Some group term insurance plans cease to offer protection the day you resign from the company. This means that even the notification period may not offer you protection under the existing group term insurance plan. Check with your company and the insurer about the coverage or the lack of it in your notification period to avoid any misunderstanding or claim denial.

    If your plan is active ensure the insurer is given a written request well in time confirming about the continuation of the term plan post the last day of your notification period.

    Continuation of group term plan after resigning
    Here are certain facts that you should know if you plan to continue your group term insurance plan post quitting your job by paying the premium from your own pocket.

    • You will be paying a higher premium: If you choose to continue with the group term insurance plan, your plan will now be considered an independent term plan. The group term insurance plan comes with a discounted premium and the premium for an independent term plan would be higher. So you will be paying a premium not only from your own pocket but also the quantum of the same would be higher compared to what was being paid by your employer for the same sum assured.
    • Be ready for a medical checkup: the insurer is most likely to request you to undergo a medical test or share details of any preexisting diseases or lifestyle quotient like smoking etc to ascertain their risk. The premium charges would be determined as per the results of your medical tests and your smoking quotient.

    Essential tips to continue seeking benefits of a group term insurance plan when you leave the company
    • Check with the group policy terms and conditions and policy documents for such an option.
    • Many group term insurance plans allow policyholders to independently continue the policy post their association with the company or group.
    • In the event of you opting for a fresh new venture of your own, it is always prudent to seek an independent life cover even if you plan to continue with your current group term plan.
    • Post conversion your group term insurance gets converted into individual term insurance and the premium charges may be higher than those previously paid by your employer.
    • Unlike a group term insurance plan which does not require any medical tests, the insurer can request you to undergo medical test wile converting your group term insurance plan to a regular term insurance plan.

    Who all are covered under group term Insurance benefit
    Today, almost every major employer offers a group term insurance plan for their employees. The growing popularity of group term insurance plan has meant that many private groups apart from employee-employers are also opting for such group term insurance plans.

    Being a cost effective protective insurance plan, group term insurance plan add value to the group while ensuring the life of each member is protected. Since group term plans offer no value at maturity, such group plans are cost effective for the insurer, allowing them to pass on the benefits with lower premium rates.

    Coverage under group term insurance: A group term insurance plans offer a protective cover for the individual member, ie, all employees of that organization. In the event a policyholder of a group term insurance plan expires during the tenure of the plan, the insurer pays out a death benefit to the nominee of the group term insurance plan policyholder. The death benefits are paid out as per the Sum Assured of the group term plan. All such benefits paid out to the nominee of the policyholder are tax-free as per Section 10(10D) of the Income Tax Act.

    Additional riders for a comprehensive coverage: A policyholder has the option of seeking additional riders like accidental death benefit rider or a critical illness rider to make the term insurance plan more comprehensive and more protective. The premium amount for any additional riders opted under a group term insurance plan is to be paid by the policyholder.

    Group term plans offer no maturity benefits and offer a cover only against death is no additional rider is opted for. Being a primarily protective instrument, group term plans offer a security benefit safeguarding against any unfortunate eventuality of loss of life of the policyholder.

    What is group employee deposite link Insurance
    Group Employee Deposit Link Insurance is a group term insurance plan available to employees working in the organized sector. The employee deposit linked insurance scheme, commonly known as EDLI is available for employees working in organizations, which are part of EPF or employee provident fund. EDLI details including the terms and conditions are managed by the employees provident fund organization (EPFO). The one big advantage of EDLI scheme is that if an employee's organization is part of EPF, the scheme allows for a term insurance cover even without opting for a dedicated group term insurance plan from any private insurer.

    Need and essentials of EDLI
    The sole motive of EDLI is to ensure that the family members of employees are protected against any unfortunate incident where the employee looses life in the working years of life. Since not all groups or enterprises offer group term insurance plans, EPFO introduced EDLI scheme to ensure there is a term insurance component for all sections of society working in the organized sector.

    • EDLI offers a protective component for employees of all sections of society working in the organized sector.
    • The employee does not have to make any active contributions towards the scheme.
    • The quantum of coverage on offer is linked to the salary of the employee making it suitable for all employees.

    Contribution component for the group employee deposit link insurance
    EDLI scheme is clubbed together with the Employee Provident Fund (EPF) and Employee Pension Scheme (ELS). The onus of getting the employee subscribed to the EDLI scheme is with the employer and the employee does not have to do anything to be a part of EDLI scheme. The contribution for EDLI is based on a percentage of the gross salary and DA for each employer.

    Plan Employee contribution Employer contribution
    EPF 12% of the basic salary plus dearness allowances (if any) 12% of the basic salary plus dearness allowances (if any) minus EPS contributions.
    EPS No contribution is to be done by the employee 8.33% out of 12% contribution from your employer or Rs 1250 (whichever is lower)
    EDLI Nil 0.5% subject to a maximum limit of Rs. 75

    Benefits and essential features of EDLI
    • Unlike other insurance schemes, EDLI offers complete protection with no exclusions. The protective component of EDLI scheme is applicable globally and offers a 24*7 protection to every employee.
    • The employers are free to offer their employees another group life insurance scheme but the benefits on offer should either match or better than the ones offered by EDLI scheme.
    • The employer contributes 0.5% of the monthly basic pay of the employee capped at a maximum of Rs. 15,000.
    • EDLI scheme offers a protective offering of a maximum of 30 times the last drawn salary of the deceased employee.
    • An additional bonus of Rs. 1.5 Lakhs is offered under the EDLI scheme,

    EDLI illustration and claim
    EDLI claims can be filed online using FORM 5 available on the EPFO website. The employee must be actively employed at the time of death for claims under EDLI scheme.

    For example, let us assume Mr. X who was drawing a monthly salary of Rs. 20,000 working with an enterprise expires while at active work. The maximum salary cap of Rs. 15,000 is used to calculate the sum assured. The beneficiary of Mr. X can hence claim 30 times of Rs. 15,000 plus Rs. 1.5 Lakhs bonus which comes to Rs. 6 Lakhs.
  • Q: What is group term insurance?
    A: Group term insurance is a term insurance policy that is offered to a group of people collectively. A group term insurance is usually taken by an employer to ensure the life protection of all the employees is safeguarded at all times. A group term insurance works just like a term insurance plan, offering a sum assured component in the event of the unfortunate demise of the group term policyholder during policy tenure.
    Q: What is the difference between term insurance and group term insurance?
    A: A group term insurance plan is offered to a group of people unlike term insurance plans for individuals who are offered for each individual. The policyholder does not have to pay for the premiums for a group term plan as the employer or the group manager facilitating the group term insurance plan pays for all the premiums. In an individual term insurance plan, the policyholder needs to pay the annual premium for the term insurance plan.
    Q: Who can opt for a group term insurance?
    A: Any of the employee-employer groups along with professional group of people looking for a collective group insurance can seek group term insurance. A group can be non employer-employee group, employer-employee group, bank, microfinance institution or any other professional group.
    Q: What are the different types of group insurance plans?
    A: There are various types of group term plans that can be offered by the insurer depending on the need of the group. Some group term insurance plans offer uniform cover to all members while others can offer grades in cover leading to a higher cover for more experienced or older employees compared to new or recent ones. Similarly some group term insurance plans also offer the option to choose from additional riders like critical illness rider or accident or disability benefits. A group term insurance plan may sometimes also offer cover for outstanding home or car loans. It all depends on the terms and conditions between the group and the term insurer issuing the group term insurance plan.
    Q: Do group term plans offer any maturity benefits?
    A: No. Group term insurance plans as the name suggests are primarily term insurance plans and offer no maturity benefits. The term insurance plan offer protection for the policyholder till the insurance plan is valid and pays out a death sum assured to the nominee.
    Q: Is medical test needed for group term insurance plans?
    A: No. A group term insurance plan does not require the insurance seekers to undergo any medical tests. The plans also do not need for any medical reports to be produced to the insurer at the time of seeking the group term insurance plan.
    Q: What are the common features of group term insurance plans?
    A: A group term insurance plan offers a protective component for each of the term insurance policyholder. The premium is paid by the group owner or employer although some plans do offer the option for the group members to make contributions towards the premium. Depending on the additional riders opted a group term insurance plan can also offer protection from accidental benefits.
    Q: How to group term insurance plans work?
    A: Group term insurance plans work by issuing a master policy to the group owner or administrator. The group administrator then pays an initial premium amount which covers all the members of the group for the tenure of one year for the term plan. Depending on the terms and conditions of group term plan the premiums are renewed annually.
    Q: What are the benefits to the employer offering group term insurance plan?
    A: Group term insurance is beneficial to both the employees as well as the employer offering such a term plan for its employees. Employers can make use of their gratuity liability in a group term plan fulfilling their gratuity liabilities. As per the performance of the funds, the returns on the group plan may increase with time offering a better coverage. Group term insurance plans are cost effective ensuring all employers are covered for life at minimal costs increasing the employer's social quotient.
    Q: What are the benefits to the employees for group term insurance?
    A: Employees getting a group term insurance plan get an additional benefit of life protection along with their working connection with their employer. The premium of majority of group term plans are paid by the employer as a group administrator ensuring term insurance plan for the employees without any financial burden. The group term insurance plans come with no inconvenience of any medical tests. Also the death benefits under a group term insurance plan are exempted from income tax under Section 10(10D) of the IT act.
    Q: What is the minimum size of a group for a group term insurance plan?
    A: A group term insurance plan is offered by insurers to a group administrator having a minimum strengthen of 50 individuals under its fold on an average. The number however can vary from one insurer to the other.
    Q: What is the minimum age for enrolling for group term insurance?
    A: The minimum age to qualify for entry under any group term insurance plan for an individual is fixed at 18 years.
    Q: What is the maximum age for enrolling for group term insurance?
    A: The maximum age to qualify for entry under any group term insurance plan for an individual is fixed at 69 years. The maximum age at the time of expiry of a group term insurance policy is fixed at 70 years.
    Q: What is the tenure of a group term life insurance plan?
    A: The tenure of a group life term insurance plan is fixed for one year and renewed each year, as per the terms and conditions between the insurer and the group administrator.
    Q: What is the minimum sum assured offered under a group term life insurance plan?
    A: The minimum sum assured that can be offered under a group term life insurance plan is fixed at Rs. 1,000. The group administrator can choose the appropriate sum assured for its group members depending on various factors and parameters.
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