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How Does Group Life Insurance Benefit Both Employers and Employees

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There’s nothing more frustrating than an employee handing in their letter of resignation. It’s even more annoying when it occurs within a couple of years of their hire.

Recruitment is an expensive exercise, so incentivising employees, especially those in specialist roles, may be a great way of lowering the resignation count within your business.

A group insurance plan covering life and health could be a worthwhile benefit and thus be part of the overall employee incentive package.

By providing a health and life cover to employees shows commitment, and it can go a long way in winning their loyalty and tenure. Thus, it’s a win-win for employers and employees both!

Before we articulate how group insurance benefits both employers and employees, let’s go into more detail on what group life insurance is.

What is Group Life Insurance?

A group, life insurance policy, is a life insurance product that is specially designed to provide coverage to a large group of people under a single policy.

In a group insurance policy, the owner of the policy is the organization or the employer, and the policy provides coverage to the members of a particular organization and/or its employees. As it provides comprehensive coverage at an affordable premium rate, the popularity of group insurance policy is burgeoning these days rapidly.

Moreover, there are several other benefits offered by group insurance plans.

Benefits of Group Insurance for Employees

Provides a Comprehensive Insurance Coverage

Maximum group insurance plans available in the country inevitably provide insurance coverage to the members of the group, as long as they continue to be a part of it.

A group insurance plan is beneficial for those who can’t afford to purchase a standalone life insurance policy. However, it is important to keep in mind that a group insurance policy terminates once you leave the group.

Affordable Premium Rates

The premium rates of a group insurance plan are more affordable as compared to the basic life insurance plan because the risk percentage is equally distributed over the entire group.

The premium amount is generally split between the employees and the employers and is 30-35% more economical than individual life insurance plans. Apart from this, various other factors determine the premium rate of the policy, like professional risk, average age group, etc.

Provides Coverage to the Employees’ Families 

A group insurance plan also provides coverage to the family of the insured. So, if you own a group insurance plan, then you don’t need to lighten your pocket by purchasing a separate life insurance policy for your family members.

Most group insurance plans provide sufficient coverage to the family of the insured, i.e. the spouse and the children.

Effortless Payment Option

The premium of a group insurance plan is directly deducted from the bank account or the salary of the employee. Thus, the process of premium payment is simple and hassle-free. Moreover, it automatically reduces the risk of missing the due date of the premium payment.

Rider Option

The group insurance plan also provides the option to expand the coverage of the policy by adding rider benefits at a minimum premium increment. As per your own suitability, you can purchase add-on rider benefits like a personal accidental benefit, critical illness benefit, etc.

Now that you have seen the benefits of group insurance for employees let’s take a look at the benefits of group insurance plans for employers.

Benefits of Group Insurance for Employers

Helps to Deal with Employees’ Attrition

According to the experts, buying a group insurance plan for your employees is beneficial as it shows your concern for your employees. It makes them feel valued as their health concerns are taken care of. Moreover, it also helps the organization attract more talented employees.

Asset Management and Professional Expertise

The group insurance policy that incorporates the feature of annuity and gratuity are managed by the professionally experienced insurance experts. Thus, the return on investment is greater for members who are covered under the group insurance plan.

Increased Productivity

It helps create a stress-free environment for the employees. It allows them to nurture productivity which in turn benefits the employers by meeting their short and long-term business objectives.

Offers Savings For Employers

Group life insurance provides coverage at a subsidized rate. Thus, this plan benefits the group of individuals who can’t afford to have a standalone life insurance policy. According to the risk factor of the entire group, the premium amount is calculated by the insurance companies. The premium payment can be contributed in two ways.

  • Either the entire premium amount is paid by the organization or the group owner, who owns the policy for their employees.


  • A part of the premium amount is paid by the insurer, i.e. the organization or the employers. In contrast, the rest of the premium amount is paid by the employees or members of the group insurance plan.

Thus, it is the best of both worlds, as the group insurance plan not only benefits the employees but also saves the out-of-pocket costs of the employers.

Tax Benefit

The amount contributed by the employers towards a group life insurance plan is eligible for tax deductions under the Income Tax Act. Moreover, the employees who are members of the policy can also avail tax benefits.

Wrapping it up!

The success of an organization majorly depends upon the productivity of the employees. If you have a team of motivated and productive employees, then it can benefit your business enormously.

By offering a group life insurance plan as a part of the employee benefits package, you can create a secure environment for your employees and can boost the overall productivity. Moreover, as a crucial part of the employee benefits package, a group insurance plan safeguards the finances of the employees as well as the employers at the most affordable rate.

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