Group Insurance Scheme is as the name suggests insurance protection to groups of people. Irrespective of the size of the group, group insurance covers all members under the same plan. The plan may be in the form of group life insurance, group health insurance, group travel insurance, or group personal accident insurance.
According to IRDAI group insurance guidelines, it can be employer-employee groups or non-employer-employee groups. In a formal group of employer-employee groups, all members work for the same employer or group owner. The members of an informal group may belong to holders of the same credit card, savings bank account holders of a bank, members of the same Society members of the same social or cultural association, etc. The manager of the group gets a master policy in the name of the group.
Group insurance eliminates the need to buy a separate insurance plan for each member. Often, a group insurance plan covers family members of group members. For example, many group health insurance plans cover spouses, dependent children, and parents of the group member. The group insurance plan provides an identical level of insurance coverage to all members of a group regardless of their age, gender, occupation, or socio-economic status. Generally, employers cover their employees with a group insurance plan as part of the social welfare of the employees/payout benefits. Individual members of the group are not required to fulfill pre-requisite conditions or fill in any forms, unlike individual insurance plans. Normally, the premium paid in group insurance is lower than the premium in an individual policy for a member. These plans reduce the liability of the insurance provider as the risk is spread across all members of the group.
The participants in a group insurance policy to remember the following:
Note: Group members can claim tax benefits under the income tax (old tax regime) on the premium paid by them on group insurance while filing their income tax returns. Employers can also claim tax benefits for paying premiums on insurance plans for their employees.
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