GTL Insurance - Features & Benefits of Group Term Insurance

What is GTL insurance?

GTL insurance, commonly asked as what is GTL full form in insurance, refers to group term life insurance. This is a special variant of term insurance policy that caters to covering the workforce of an organisation under a single master policy. Hence the name group term insurance. As an employer-owner, you can avail a GTLI for all the people working in your company.

So what’s attractive about GTL insurance?

This policy offers a fixed payout/monetary benefit if a worker passes away during regular employment. The compensation can be in the form of equated monthly instalments or a lump sum payout. The money is given to the employee’s dependents/immediate family members/nominees.

The group of individuals (in this case, employees of an organisation) are covered for a specific period during the standard track of employment. This particular period is known as the term. The organisation entirely bears the cost of a group term insurance plan if you are an employee. You need not have to take out money from your pocket to get protected. To give you peace of mind, it is your family who is going to benefit in times of your unfortunate demise.

A group life insurance scheme comes as a perk of working in a company. Your employer is the policyholder, and the workers are the beneficiary. So what are you waiting for? Get employed today and secure the future of your family financially. ‍

Group term life insurance policy – Features and Benefits‍

A group term life cover should be a must-have component in your employee benefits portfolio, along with GMC insurance and GPA coverage. Irrespective of age, employment and occupation, all employees can be covered under GTLI. Here is a good list of advantages of GTL insurance.
Death benefit and payment

The core nature of a group term insurance policy is to provide guaranteed compensation to the employee’s family in case of death during employment. A tragic event leading to death can happen to any workforce member. We all know that nobody is immune from the clutches of death. But with a GTL policy, your employee and their family will move on stress-free financially.

Premium included or excluded

By default, the GTLI premium for the master umbrella plan is paid by the corporate. Companies include this as a business expense in their annual cost sheet structure. This means that anyone who works in an office and is covered does not have to pay anything from their wages.

In rare cases, an employee is required to pay a partial premium amount. Again, this depends on your company’s policy structure; the amount is usually deducted from the workers’ salaries.

Get cover when you join

We mentioned earlier that a group life insurance policy comes under the employee benefits package of a corporation. Once you join the company, you are automatically enrolled by the human resources department into the respective plan.

Even better, modern platforms like Plum Insurance provide a complete customisation option for both employer-employee to select the desired features to be included under GTL insurance.

The master policy is vital

If you are employed in a business institution with GTL coverage. You will be covered under the master plan. All employees, irrespective of having/not having an insurance plan, will be automatically included in the master policy.

The organisation purchases the master contact policy at a fixed premium rate determined by the group’s size. The company selects the sum assured amount to be paid for each employee.

Inexpensive and suitable‍

Buying individual term insurance plans for each employee is not only a herculean task but also a costly process. That is why you should move ahead with a single master plan. In this case, the insurance provider will come up with a suitable premium quote based on your organisation and employees’ requirements.

Additional factors such as management costs, maintenance fees, and renewability will be taken care of within the same plan.

Premium payment option‍

The employer pays the premium to the insurance policy provider. The premium is usually paid annually and is subject to the organisation’s size. The more employees to cover, the higher the premium rate and vice versa.

Policy tenure and term‍

The term refers to the period under which an employer-employee is eligible for cover. The policy tenure is generally one year and is subject to renewal.

Modified cover option‍

Another important benefit of group life insurance is the feature to upgrade cover as per the individual employee. Many companies provide graded cover to the top brass management, and senior professionals get more cover than employees at lower grades.

The graded cover is not mandatory. Startups, SMEs and many businesses provide uniform cover ergo of position in the organisation.

Community life insurance‍

This does not involve a new type of group life insurance scheme. You can refer to this as the contributory and non-contributory setting. In the contributory setup, an employee is required to make a partial payment towards the premium amount. It is basically deducted from the salary. You can claim income tax benefits on the partial contribution.

In the non-contributory setup, the company pays the full premium on behalf of the entire workforce.

Portability eligibility‍

When you leave the company, so does the benefit of this policy. Many insurers will allow you to convert GTL to an individual policy but at the cost of an additional premium.

Backed by fund managers

‍Veteran and seasoned professionals (fund managers) are employed by the insurance groups to manage the pool of GTLI funds. The fund managers ensure that in the event of a financial crisis, the company is able to manage payouts, superannuation and gratuity benefits.

Group credit protection‍

Banks are the first to bear the losses if an employee passes away with significant debt (loans, liabilities, etc.). This is where financial institutions in the lending space can utilise group credit protection plans that cover incidents mentioned before.

Look at our super fantastic employer-employee insurance.

FAQ

Q. How does the death benefit of a GTL policy compare to that of individual term life insurance policies?

‍The death benefit in GTL policies is generally a predetermined amount agreed upon in the master policy and is designed to provide a safety net to all employees under a single policy. In contrast, individual term life insurance policies allow for more personalized coverage amounts based on the individual's needs and financial goals, often resulting in higher or more tailored death benefits.‍

Q. What are the tax implications for employers and employees under a GTL policy in India?For employers in India, premiums paid towards GTL insurance are typically considered a business expense and are tax-deductible. For employees, the benefit received from a GTL policy is tax-free under Section 10(10D) of the Income Tax Act, provided the sum assured is in compliance with the conditions specified under the Act. However, any employee contribution towards the premium may have different tax implications.‍

Q. How does the coverage of a GTL policy change if an employee leaves the company?When an employee leaves the company, their coverage under the company's GTL policy typically ends. However, some insurance providers offer the option to convert the group policy into an individual policy, allowing the employee to maintain their life insurance coverage without a break. This conversion may result in higher premiums or different terms due to the individual underwriting process.