Term life insurance that offers life cover to a group of people, usually employees of a company or members of a trade union or an association is classified as group life insurance. This type of life insurance cover is quite affordable and it does not require the individual to furnish proof of his insurability.
On the contrary, the size and turnover of the group along with its financial strength is considered by the underwriters as criteria for insurability. Group life insurance terminates when the member or employee reaches a certain age or leaves the company or organization and do not accrue any cash surrender value.
Most group life insurance plans have a one year term that comes up for renewal every year when both the employer and the insurance company have the option to decide whether or not to continue with the policy. Under the group life insurance plan the company or the union is the policyholder and each covered individual is issued a certificate that shows his certificate number or proof of cover.
In certain cases the company or the organization offers cash value insurance as an option to the members of the group life insurance plan which the members can purchase by the process of salary deduction.
Group life insurance also offers additional personal insurance to fill gaps in insurance cover and the employee could buy these at his own option. Individual (Non Group) life insurance policies are also offered by certain companies within their premises where a representative of the company providing the group insurance coverage is usually available to handle queries about the particular group coverage as well as review other group life insurance plans.
There are other types of group life insurance plans where individual policies are purchased to include business oriented plans where the employer pays the premiums, and the benefits are split between the employee and the employer.
Group life insurance cover is ideal for the individual who is not in a position to meet the cost of covering himself adequately so that in the event of his death there is some compensation for his near and dear ones. Most established companies have a group life insurance policy for their employees for which a nominal amount is charged. But as in the case of most other insurance products, group life insurance has also grown and evolved considerably and as a result today we have numerous variants of the plan catering to people with different levels of affordability.
Group life insurance plan is not available to companies and organizations with less than 15 to 20 employees.