Understanding group term insurance policies: Eligibility conditions
If your company offers group term insurance benefits, don’t miss out! A term insurance policy is a type of life insurance policy that offers a death benefit. In case of the demise of the policyholder, it makes a pay out to their family to help support them financially. As an employee, you may have access to group term insurance through your employer.
Group life insurance can provide a sense of security for many people, because it is often offered at a group rate, which is typically lower than individual rates. However, group term life insurance policy’s eligibility conditions are not always as simple as they might seem.
What is group term insurance?
Group term insurance policies are designed to offer the benefits of term insurance to a group of people in an accessible and affordable manner. Companies typically purchase group term insurance for their employees as an employer-sponsored benefit plan.
Group insurance plans offer a base amount, and you can choose to purchase additional coverage and benefits through salary deductions. You can choose to include your spouse and children and opt for add-ons such as education allowance, accidental death cover, etc. Such customisations are typically available to allow the policy to fulfil the specific needs of different employees.
Given the unprecedented times, group term insurance is important. This form of term insurance is intended to safeguard employees from financial difficulties within the policy’s specified tenure and eligibility requirements.
What are the eligibility criteria of the basic group term insurance?
Group term insurance is one of the most common types of life insurance for employees because it provides a cost-effective way to offer coverage. When employees fulfil eligibility conditions, they are generally enrolled as part of the company’s group term life insurance plan. The criteria for being enrolled may include working a particular number of hours each week or being employed for a stipulated period within the organization.
Unlike individual policies, group plans do not require applicants to go through the underwriting process. Instead, regardless of their condition, all qualified employees are immediately insured. There’s no need for any specific qualifications or requirements – just being part of the company and getting enrolled for the basic plan gets you automatic coverage. The minimum age requirement is 18 years old, while the maximum age varies from 65 to 69 years old.
An individual person will not be able to apply for a group term insurance plan without being a part of any group, i.e. organisation or company, etc. So, the first criteria to avail group term insurance plan, is to be a part of that group, because coverage would continue only as long as you are a part of the same group and not thereafter.
What are the eligibility criteria of the supplemental group term insurance?
Supplemental group term insurance is any additional cover you opt for through your employer. For most employees, the basic group term insurance coverage offered is enough. However, for some others, that coverage may not be enough, and they may want to opt for supplemental group term coverage. This is helpful for those employees who have pre-existing conditions or are unable to get approved for an individual life insurance cover.
Some companies also offer additional group term insurance coverage to employees based on designation and salary, which increases with a rise in their income. Thus, the eligibility criteria of supplemental group term insurance plans differ from one company to another. Some employers provide the plan after the employee reaches a certain age milestone or after achieving a major event such as childbirth.
In some other cases, additional coverage under basic plans can be extended during open enrolment. However, employees enrolled under supplemental group term insurance are required to go through the underwriting process unlike those under the basic plan.
Conclusion
Group term insurance is a type of life insurance that provides coverage for individuals who are part of the same group, or plan. Group term policies are often offered by employers at a reduced rate as a part of the employees benefit program. It is important to make sure that your eligibility conditions match up with what is required before signing on any dotted lines.
Frequently Asked Questions
- How to calculate term insurance premium?
You can use online term insurance premium calculators to determine your premium on any term insurance plan. Alternatively, you can also contact your insurer or employer in case of group term insurance for the same.
- Is it possible to continue group term insurance after leaving the job?
Once you leave your organisation, you will lose the group term insurance coverage. However, in some cases you can port or convert the group term insurance to an individual term insurance plan.
- What is the policy tenure of the group term insurance plan?
The usual policy tenure of a group term insurance plan is one year. As a result, it must be renewed on a yearly basis.