Employers in the corporate sectors aim to provide an added benefit to their employees to keep their attrition rates low. Trading Economics reports that the employment rate in India stands at 42.3% during the third quarter of 2021[1] which means a substantial workforce is employed. The global COVID-19 scare made people realise how serious an illness can get. Thus, it is important for employers to look after the well-being of their employees to ensure continued association and achievement of organisational objectives.
Among the several benefits that employers provide, other than salary compensation, a group term life insurance policy is a noteworthy one. Here, a master policy covers the hundred and even thousands of employees of a company. This article elucidates how employers can select a suitable group term life insurance plan.
But first, what is a term insurance plan?
It is important to know how a term insurance plan works to have a better grasp of what a group term life insurance is.
A term insurance policy is a pure life insurance product that focuses solely on protecting the life of the policyholder, unlike other life insurance plans that balance the investment and protection objective. In case of an unfortunate demise of the policyholder during the tenure of the policy, the insurance company compensates the nominees with the sum assured amount.
Now, let’s look at what a group term life insurance is.
A group term life cover is an insurance plan where the same term insurance cover is made available for a large group. For these plans, there is a master policy that is purchased by the employer in the case of corporate houses. This master plan defines the base coverage that is available for every employee covered under it. But it can be enhanced using the optional riders that are available for each member to buy.
Here are some tips on how employers can choose the right group term life insurance for their employees
- Providing a comprehensive insurance coverage
Life is unpredictable and the recent pandemic has taught the importance of a life insurance policy to support your family. Keeping that in mind, employers must aim to provide comprehensive life insurance coverage to their employees. This way, the employees can be rest assured knowing that their families need not worry about financial instability or falling into a debt trap in their absence.
Ensuring these plans also allow treatments for critical ailments across a wide network of hospitals. Further, many employees may rely entirely on the employer-provided life insurance cover, and hence, ensuring it provides sufficient coverage to secure the employee’s family is essential.
- Customising the insurance coverage
Every employee may have different needs and the employers must keep that in mind. Buying a master policy that allows employees to customise their individual life insurance cover is an effective way to ensure that all employees have a broad life cover in addition to having optional riders based on their individual requirements. Common riders to look for when buying a master plan are critical illness insurance cover, accidental death or disability rider, and so on.
- Encourage the use of technology
Having knowledge of technology and how to access life insurance coverage online is essential. Educating your employees on the use of technology to access their life insurance policies comes in handy. This way, the entire claim settlement process can be completed online without having to visit the insurance company’s office. Online claims eliminate the hassles involved and also help maintain a trail of all the stages of the insurance claim.
- Selecting a reliable insurance company
As an employer, it is your prime responsibility to ensure the insurance company is a reliable one. Focusing on low-cost policies for the organisation can prove to be expensive in the long run for the employees. Instead, choosing a group term life insurance from an established insurance company with a high level of expertise in the domain can be beneficial as they have a proven track record of successful claim settlements. Hence, a balance between the cost and the policy coverage is essential. Employers must also look at critical indicators like the claim settlement ratio provided by the regulator, the IRDAI, on its website.
To conclude, employers must make their employees aware of the nuances of what a group term life insurance is and how they can create a financial shield for their families.
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