5. Group Life Insurance
Group Life Insurance has gained popularity these days. For persons in the lower income group, it may be the only insurance cover available. For others, the low cost group life insurance is supplement to the individual life insurance cover. Group life insurance may be defined as a plan which provide coverage for risks on the lives of a number of persons under one contract. However, the insurance on each life is independent of that on the other lives. Group life insurance facility is provided to the employees working with an employer without evidence of insurability.
The main features of group life insurance are:
i. Insurance is provided to all employees without any evidence of insurability.
ii. It provides risk coverage to the employees as long as they remain in the service of the employer.
iii. Group life insurance is basically a contract between the insurance company and employer. The policy issued to the employer is called master contract.
iv. The premium is generally paid jointly by the employee and the employer.
v. The amount of premium is paid at a flat rate without any regard to the age and salary of the employees.
vi. In case of injury or death to an employee, the claim received by the employer is paid to the employee or his nominee.
Group life insurance is a welcome relief for the employees as they get insurance cover by paying a very small amount of premium. Salaried people in low income groups may otherwise find it very costly to get individual insurance policies. High salaried persons can use group life insurance as a supplement to the individual life insurance. For the insurance company, cost of administration is low as only one policy is issued for several persons. The employer can get insurance cover for his employees at low cost and thereby provide security to them. Therefore, group life insurance is gaining popularity these days.