Group life insurance may be defined as a plan which provides coverage for the risks on the lives of a number of persons under one contract. The basic feature of this scheme is the coverage of a number of persons under one contract. Group insurance facility is provided to the employees working with one employer. The important features of this scheme are as follows :
Benefits of Group Life Insurance
- Insurance is provided to all employees working under one employer without any evidence of insurability.
- This scheme provides risk coverage to the employees so long as they remain in the service of the employer.
- Group life insurance is a contract between the employer and the insurance company. The policy issued to the employer is called Master contract.
- The premium is paid jointly by the employer and the employees.
- The amount of premium is payable at a flat rate without any regard of the age and the salary of the employees.
- In case of injury or death of an employee, the claim received by the employer is paid to the employee or his nominee.
Group insurance proves to be very cheap because of economy in mass administration. It is a welcome relief for the employees as they get insurance cover by paying a very small amount of premium.
High salaried people can use group insurance as a supplement to the individual life insurance. For the insurance company, the cost of administration is low as only one policy is issued for several persons. The employer can provide security cover for the employees at very low cost. Because of these reasons, Group life insurance is becoming very popular now-a- days.