What is a Group Insurance Policy? Everything You Need to Know

Insurance is a type of contract between an insurance company and individuals/businesses with the aim of building wealth and seeking protection against financial losses. There are insurance of various kinds whose primary objective is to help protect your assets and loved ones. When purchasing insurance, the contract is also known as a policy or plan, and as a buyer, you are the policyholder. Different types of insurance, such as health insurance, auto insurance, life insurance, etc., cater to the specific needs of individuals.

Table of Content

• Types of Groups Eligible for Group Insurance
• Types of Group Insurance Plans
• Features of Group Insurance Policy
• Various Objectives of Group Insurance Policy

Group insurance is a kind of insurance plan whose policies provide coverage to a defined group of people. Group insurance can be of any type, such as providing health coverage, life coverage or other forms of coverage. A group insurance policy provides the same coverage to the entire group irrespective of their age, gender & occupational status. Group insurance policy is an ideal option for families and employees, due to its convenience of providing coverage to the entire family or an organisation under the same plan.

Types of Groups Eligible for Group Insurance

In India, two types of groups can be covered under group insurance:

Formal groups – This group consists of working professionals where an employer may purchase a group insurance policy for its employees.

Informal groups – This group consists of people in a society or cultural association. Here the policy is purchased by the head of the association.

Types of Group Insurance Plans

Mentioned below are a few types of group insurance policies that are available in India: -

Health Insurance: Group health insurance is the most popular among those who wish to purchase a group insurance policy. It provides coverage on medical expenses for group members such as hospital stays, doctor visits, prescription drugs and expenses related to preventive care.

Life Insurance: Group life insurance policies provide life insurance coverage for an entire group. After the death of an individual who is covered under a group life insurance plan, they can leave a significant amount of financial support for their loved ones or beneficiaries after their death. This type of financial support to families can be crucial in difficult times.

Accidental Insurance: This type of insurance provides accidental coverage such as expenses incurred due to an accident causing injury or an accidental death. This type of group insurance scheme is for employees present in both small and large groups of people.

Travel Insurance: This type of group insurance is ideal for those who like to travel frequently for business or leisure. Travel insurance policies provide coverage on travel-related issues, medical emergencies, lost luggage and more.

Group Critical Illness Insurance: This type of insurance provides a lump sum amount to an individual who has been diagnosed with critical illness like cancer, heart disease, stroke, etc.

Suggested Read : A Complete Guide To Group Term Life Insurance Plans In India

Features of Group Insurance Policy

• Group insurance provides coverage at competitive rates.
• The head of the group who makes the purchase gets the master policy.
• The members of the group are covered as long as they are part of the group.
• Employers who provide group health insurance to their employees can avail tax benefits.

Various Objectives of Group Insurance Policy

Term insurance – Group insurance plans ensure that your beneficiary receives the sum assured in case of your death over the employment tenure with the company.

Annuity – Group insurance policies also provide retirement plans which can be availed of by employees post-retirement.

Gratuity – An employee becomes eligible for gratuity after completing 5 years of service. However, it is subject to relevant laws. With a group insurance policy which provides investment options to the organization, you can create a corpus for gratuity.

Savings – Group insurance helps in mobilizing the savings of group members which in turn meets the long-term financial goals of participating members.

Covering Liability – Group insurance can also cover up your liability by providing outstanding dues such as personal loans & home loans in cases of the participating member’s death or disability.

Muthoot Finance provides different types of group insurance policies that are available, based on the requirement of insurance protection for wider coverage and special benefits.