Ouick Overview

Group term life insurance is a life insurance policy that covers a group of people under a single master policy. Employers, banks, or associations usually buy it for their employees, customers, or members.

The insurer offers life cover at a lower cost since the risk is spread across many people. If a covered member passes away during the policy term, the insurer pays the sum assured to their nominee (family).

Group term life insurance often comes tied with your job, but many people do not fully understand how it works or what it covers. This guide walks you through what group term insurance really offers, where it falls short, and how to decide if you need additional protection.

Unsure whether to buy a single term plan or group term insurance plans? Don’t worry. Book a free call with us and let our advisors help you out.   

How Does Group Term Life Insurance Work?

Here’s how a group term insurance works:

    • The organization/employer acts as the policyholder and negotiates coverage terms with the insurer. 
    • Next, eligible members join the plan automatically or opt in. 
    • The employer or institution pays the premium, sometimes with partial contribution from members.

The policy can be renewed every year, and members can be added/removed during the year (rules vary by insurer/scheme).

Did You Know?

As per IRDAI, a “group” includes people linked by a common purpose or economic activity. This covers both employer–employee groups and non-employer groups with a clear, non-insurance relationship.

Types of Group Life Insurance

1. Employer-Employee Group Insurance: Employers offer life cover to employees, often linked to salary ( CTC). Some plans also protect key employees whose loss could affect business income.

2. Non-Employer–Employee Groups: These cover members linked by a common financial or professional relationship. These include NBFCs, banks, credit card holders, borrowers, depositors, and professional or affinity groups.

3. Supplemental Group Insurance: Employees can choose extra coverage over the base plan by paying a small additional premium, still at lower group rates.

Note: There is no single fixed minimum group size. It varies by insurer, policy design, and the type of group being insured.

Advantages of Group Term Life Insurance

Lower Premiums

Since the risk is spread across a large group, premiums are significantly lower than individual life insurance plans, making it a cost-effective choice.

Tax Benefits

Premiums paid by the employer can be claimed as a business expense, while any benefit received by the employee’s nominee is tax-free under section 10(10D).

Riders Can be Added

Organizations/employers can enhance the base cover by offering optional term riders like accidental death or disability, which ensure protection based on individual needs.

Improves Employee Benefits

Providing life insurance makes the benefits package stronger, helps attract and retain employees, and shows that the employer cares about employee well-being.

Disadvantages of a Group Term Life Insurance

    • Coverage Ends When You Leave: Group term insurance stays active only while you are part of the organization. Once you leave, the cover usually stops unless you convert it to an individual plan, which often comes at a higher cost and is subject to the insurer's approval/underwriting.
    • Lower Coverage Amount: The sum assured is usually limited and may not be enough to support your family or clear large loans.
    • Limited Flexibility: You cannot customize the policy. Terms, riders, and coverage are fixed by the group.
    • No Personal Tax Benefit: Since the employer pays the premium, you usually cannot claim tax benefits on it. But in case an employee/member is paying any portion of the premiums, that may also be tax exempt under 80C of the old regime.
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Leading Group Term Life Plans in India

01

Max Life Group Term Life Platinum Assurance

A flexible group policy suitable for businesses of all sizes. It offers customizable benefits like spouse and dependent cover, helping employers tailor coverage to workforce needs.

02

HDFC Life Group Term Plan

This plan by HDFC provides essential death benefits with flexible premium structures and reliable service, making it a good choice for organizations looking for cost-effective group protection. The plan comes with optional riders like group illness and critical illness plus rider.

03

ICICI Prudential Group Term Insurance

Designed for both corporate and association groups, this plan by ICICI combines competitive pricing with smooth policy administration and efficient claims support.

Apart from the above plans, you can also explore Group Term Life plans offered by TATA AIA and Bajaj Life.

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What is the Cost of Group Term Life Insurance?

Group term premiums depend on the overall risk of the group and how the cover is designed. Insurers usually assess:

    • Group Profile: Insurers look at the group’s age and gender mix, the nature of work, and where members are located. They also consider the group size and how the sum assured is structured, such as a flat amount, a salary multiple, or a loan-linked cover.
    • Underwriting Rules: Free Cover Limit decides who needs medical tests. Members covered within this limit often skip medicals. Higher limits may need checks, based on group size and average cover.
    • Claims Experience: For large groups, past claims can influence renewal pricing. A better experience often leads to steadier rates and renewal discounts.
    • Payment Structure: Premiums may be paid by the employer, employees, or both. Payment frequency can vary.

Why Choose Ditto for Term Insurance?

At Ditto, we’ve assisted over 8,00,000 customers with choosing the right insurance policy. Why do customers like Vijay below love us:

Group Term Life Insurance
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    • Rated 4.9/5 on Google Reviews by 15,000+ happy customers
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    • Dedicated Claim Support Team
    • 100% Free Consultation

You can book a FREE consultation. Slots are running out, so make sure you book a call now!

Ditto’s Take on Group Term Life Insurance

Group term insurance works well as a safety net, not a complete solution. It offers low-cost protection and easy access, which makes it valuable for employees and borrowers. But coverage ends when you leave the job.

At Ditto, we recommend treating group term insurance as a bonus, not as a replacement for an individual term plan. A personal term policy ensures long-term protection that stays with you, no matter where you work or borrow from.

If you are also looking for a personal term plan from insurers with an established track record, we suggest plans like Axis Max Life Smart Term Plan Plus. Explore more about how our experts evaluate term plans through Ditto’s cut.

Note: Ditto does not primarily operate in the group insurance space. All information in this article is based on details available publicly available sources.

Frequently Asked Questions

Is group term life insurance enough on its own?

Group term insurance offers basic cover, but it is often limited. Most individuals still need a personal term plan for full financial protection.

What happens to group term insurance if I change jobs?

The cover usually ends when you leave the employer, unless the policy allows conversion to an individual plan at a higher premium.

Can employees increase their coverage under a group term plan?

Some employers allow voluntary top-ups where employees can buy extra cover by paying an additional premium.

Do group term life insurance plans require medical tests?

Medical tests are often not required up to a certain limit called the Free Cover Limit. Higher coverage may need underwriting.

Is group term life insurance taxable?

Death benefits are generally tax-free for nominees under Section 10(10D), subject to prevailing tax rules.

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