Business Finds: Understanding The Conditions And Clauses Of A Group Life Insurance

Group Life Insurance

Your employees form the foundation of your company and it is your responsibility to look out for their well-being and that of their loved ones. As more and more employers are beginning to comprehend the importance of this situation, they are becoming keen to offer group life insurance in employee benefits packages. This life insurance product’s focus is to cover a fairly large group of people under a single contract against untimely death, accident or sickness. However, since each business is unique, there is no “one” group life insurance plan to fit them all. Consider your priorities and that of your employees and only then request a customized policy which will not only help you reduce employee attrition, but also play a solid role in shaping your company culture.

Eligibility

Your company is eligible to obtain a group life insurance policy if you employ a minimum of 11 individuals who are between the ages of 18-64 years. The employer is responsible for keeping the master contract while all employees or members of the group receive a certificate of insurance, which can be used at the time of need.

Term

Term insurance consists of the company providing a base amount of group coverage to employees who meet eligibility requirements. Coverage begins on the day the employee joins, or in some cases, 30 days after, and automatically ends when the individual’s employment is terminated. When an employee is covered under a basic term life insurance and becomes the victim of an untimely death, the family of the deceased will receive the agreed-upon sum. The total coverage available to employees is dependent on details such as tenure, base salary, and the number of dependents. It does not accumulate cash value and insures the policyholder for a specific term, whether ten, 20 or 30 years.

Permanent

Term insurance is usually terminated once the employee leaves, however, many employers give their staff the option of converting their group insurance policy into individual permanent life insurance coverage, so they can continue to secure their family’s financial future. 

Clauses

  • Death Due to Any Cause (DAC): When the insurance company is required to pay the agreed-upon sum to the designated beneficiary in the event of an employee’s untimely death due to either sickness or accident (terms and conditions apply).
  • Terminal Illness (TI): When an employee is officially diagnosed as being terminally ill and has a less than 6-month expectancy rate, the insurance company is responsible for paying the agreed-upon sum.
  • Critical Illness (CI): In the event that an employee suffers from a critical illness such as cancer, kidney failure, heart attack or stroke and the survival period is between one-two months, the insured party is paid a lump sum upon in accordance with the policy definitions.
  • Repatriation Expenses (RE): In the case, an employee’s mortal remains need to be repatriated to their home country, the insurance company will reimburse the amount as long as it doesn’t exceed the maximum limit agreed upon in the policy.

Group life insurance plans are a way for companies to offer their employees protection to those who matter most to them, their families. Companies need to be aware of how these policies work so they can select and tailor the coverage.