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Answers to the most common questions Indian employers, HR teams, and founders ask about group term life insurance. Covers fundamentals, coverage, sum assured, claims, cost, tax treatment, and how group term life compares with EDLI, group health, and individual term insurance.
Fundamentals
What is group term life insurance?
Group term life insurance is a single life insurance policy an employer buys to cover all eligible employees for a defined term, usually one year and renewable. On the death of an insured employee during the term, the insurer pays a lump-sum death benefit to the employee's nominee. The premium is paid by the employer to an IRDAI-licensed life insurer.
Read more: What is group term life insurance? · GTL insurance: features and benefits of group term insurance
What is GTL insurance?
GTL stands for group term life insurance. It is a pure-protection life insurance policy that covers a group of employees under one master contract held by the employer. GTL pays a lump-sum death benefit to the employee's nominee if the employee dies while employed. It has no maturity value, no savings component, and no cash surrender value.
Read more: GTL insurance: features and benefits of group term insurance
How does group term life insurance work?
The employer buys a one-year renewable policy from a life insurer for a defined sum assured per employee. Premium is paid annually by the employer. If an insured employee dies during the term, the nominee receives the sum assured as a lump sum. Cover ends when the employee leaves, the policy is not renewed, or the term expires.
Read more: What is group term life insurance and how does it work?
What is the difference between group term life insurance and individual term insurance?
Group term life insurance is bought by an employer for all eligible employees under one master policy, with premium paid by the employer and no individual medical underwriting up to the free cover limit. Individual term insurance is bought directly by a person, uses full medical underwriting, has a longer 10 to 40 year term, and continues regardless of employment status.
Read more: What is the difference between group term insurance and individual term insurance? · Group life insurance vs individual life insurance: know the difference
What is group life insurance and how is it different from group health insurance?
Group life insurance pays a lump-sum death benefit to the nominee if an employee dies during the policy term. Group health insurance pays hospitalisation and medical expenses when an insured member is treated. Life pays on death; health pays on treatment. They are separate policies with different insurers (life vs general/health) and serve different purposes.
Read more: What is group life insurance and how is it different from group health insurance?
Who is eligible for group term life insurance?
Any registered Indian entity with a minimum group size can buy group term life insurance. IRDAI defines a group as 7 or more members. Eligible members are full-time employees on the payroll, typically aged 18 to 65. Some policies also permit spouse cover as an add-on. Contract workers can be included as a separate schedule.
Read more: Who is eligible to buy group insurance?
What are the benefits of offering group term life insurance to employees?
Group term life insurance protects an employee's family from income loss, strengthens the total rewards package at low per-employee cost, and qualifies as a deductible business expense under Section 37(1) of the Income Tax Act. Premium is a small fraction of group health insurance premium, so it improves benefit maturity without significantly raising the benefits budget.
Read more: Benefits of group term life insurance plans · Why choose a group life insurance policy?
Coverage and sum assured
What does group term life insurance cover?
Group term life insurance covers death of the insured employee from any cause during the policy term, unless specifically excluded. This includes death from illness, natural causes, or accident. The nominee receives the sum assured as a lump sum. Some policies add riders for accidental death, permanent disability, critical illness, or terminal illness at additional premium.
Read more: What is group term life insurance and how does it work?
How is the sum assured determined in group life insurance?
Sum assured is set by the employer at policy design. Common approaches are a flat amount per employee (₹10 lakh, ₹25 lakh, ₹50 lakh), a multiple of annual CTC (typically 2 to 10 times), or graded by designation. Some policies tie sum assured to 24 or 36 times monthly salary. IRDAI does not prescribe a minimum or maximum.
Read more: How is the sum assured determined in group life insurance? · How is the sum assured in group term life insurance determined?
What is the typical sum assured in a group term life policy?
Typical sum assured ranges from ₹10 lakh to ₹1 crore per employee, with most Indian companies at ₹25 lakh to ₹50 lakh. Startups often use flat sums like ₹25 lakh. MNCs and financial services companies use 2 to 10 times CTC. Higher sum assured raises premium proportionally but per-employee cost stays low.
Read more: How to choose the right sum assured under a term plan · What is sum assured in insurance?
Does group term life insurance cover accidental death?
Yes. Death by accident is covered under the base group term life policy, as long as the cause is not specifically excluded. Employers can add an Accidental Death Benefit (ADB) rider that pays an additional sum on accidental death, effectively doubling the payout. ADB is a separate rider from base GTL and comes at extra premium.
Read more: Benefits of group term life insurance plans
What is not covered under group term life insurance?
Standard exclusions include death by suicide within the first 12 months of policy inception (per Section 45 of the Insurance Act), death from war or nuclear risks, death from participation in criminal activity, and death from pre-existing conditions if fraudulently non-disclosed. Riders like accidental death may exclude adventure sports, intoxication, and self-inflicted injury.
Read more: What is group term life insurance and how does it work?
Claims and nominee
Who is the nominee in a group term life policy?
The nominee is the person the insured employee designates to receive the death benefit if the employee dies during the policy term. Common nominees are spouse, children, parents, or siblings. Under Section 39 of the Insurance Act 1938, a beneficial nominee (parent, spouse, or child) has legal ownership of the payout. Employees update nominees through the employer's HR portal.
Read more: Who can be a nominee in insurance? Eligibility, types and rules
How is a group term life insurance claim filed?
The nominee, along with the employer's HR team, files a claim by submitting the death certificate, employee ID proof, nominee ID proof, and claim form to the insurer. The employer confirms the deceased was an active employee on the date of death. The insurer verifies documents and pays the sum assured to the nominee, usually within 15 to 30 days.
Read more: What is group term life insurance and how does it work?
What documents are required to file a group term life claim?
Documents include the original death certificate, employee's ID and address proof, nominee's ID proof and bank details, the completed claim form, and the employer's confirmation of employment. Additional documents may include post-mortem report and FIR for accidental death, medical records for death from illness, and a discharge summary if death occurred in hospital.
Read more: What is group term life insurance and how does it work?
Cost and premium
How much does group term life insurance cost per employee in India?
Group term life insurance costs around ₹300 to ₹1,500 per employee per year for ₹10 lakh to ₹25 lakh sum assured, depending on age profile, sector risk, and rider selection. Younger workforces at lower sum assured fall at the lower end. Adding accidental death or critical illness riders raises the premium proportionally.
Read more: Benefits of group term life insurance plans
How is the premium calculated for group term life insurance?
Insurers calculate premium as a percentage of sum assured (typically 0.05% to 0.15% per year), adjusted for the group's age distribution, gender mix, occupational risk, and prior claims experience. Sedentary office workforces pay lower rates than field-heavy or industrial workforces. Larger groups get better rates due to risk pooling.
Read more: How is the sum assured determined in group life insurance?
Who pays the premium for group term life insurance?
The employer pays the premium in an employer-sponsored group term life policy. Under IRDAI rules, only the master policyholder (the employer) is billed by the insurer. Some policies allow voluntary top-up cover where employees fund additional sum assured through payroll deduction at the subsidised group rate.
Read more: Who pays the premium in employer-provided health insurance in India?
Tax treatment
Is group life insurance taxable for employees in India?
No. Group term life insurance premium paid by an employer is not treated as a taxable perquisite in the employee's hands, because the premium is a pure risk cover with no accrued benefit or cash value payable to the employee during service. The employee owes no income tax on the premium. The death benefit to the nominee is separately tax-exempt.
Read more: Is group life insurance taxable for employees in India?
Is the group term life premium a tax-deductible business expense?
Yes. Group term life insurance premium paid by an employer is a deductible business expense under Section 37(1) of the Income Tax Act, since it is incurred wholly and exclusively for business purposes and represents a staff welfare cost. The deduction reduces the company's taxable profit for the financial year in which the premium is paid.
Read more: Employer tax deduction for group health insurance premium in India
Is the death benefit from group term life insurance taxable?
No. The death benefit paid by the insurer to the nominee is exempt from income tax under Section 10(10D) of the Income Tax Act. The full sum assured is received tax-free, regardless of the amount. Section 10(10D) applies to all life insurance proceeds paid on death, including proceeds from group term life policies.
Read more: Is group life insurance taxable for employees in India?
Employer decisions
Should an employer offer group life insurance in addition to group health?
Yes, for most companies. Group health covers medical bills during illness or hospitalisation; group term life covers loss of income for the family if an employee dies. The two policies protect against different risks and complement each other. Group term life premium is a small fraction of group health premium, so the marginal cost is low.
Read more: Should an employer offer group life insurance in addition to group health?
What is the minimum number of employees required for group term life insurance?
IRDAI defines a group as 7 or more members for group life insurance. Some insurers accept smaller groups down to 5 lives, and a few specialised products cover 3 or more. Startups and small companies with fewer than 7 employees may need to wait until headcount grows before qualifying for a standard group term life policy.
Read more: Minimum number of employees required for group health insurance in India
What happens to group term life cover when an employee leaves?
Cover ends on the employee's last working day, unless the employer extends it as part of exit terms. Unlike group health insurance, group term life does not have a portability route to convert into an individual policy under IRDAI rules. Departing employees who want continued life cover must buy an individual term insurance policy separately.
Read more: What happens to employee health insurance when an employee leaves?
Can a startup buy group term life insurance?
Yes, once the startup has at least 7 employees, in line with IRDAI's group definition. Some insurers accept smaller groups. Group term life is a low-cost, high-impact benefit for early-stage companies, typically adding ₹300 to ₹1,500 per employee per year to the benefits budget. Startups often pair it with group health as a founder-signalled talent package.
Read more: How to protect your startup with group term life insurance
How is group term life insurance different from EDLI?
EDLI (Employees' Deposit Linked Insurance) is a mandatory life cover under the EPFO for employees enrolled in EPF, funded by an employer contribution of 0.5% of wages up to a wage ceiling. The maximum benefit is ₹7 lakh. Group term life insurance is voluntary employer-bought cover with higher sum assured, offered on top of EDLI to bridge the coverage gap.
Read more: GTL insurance: features and benefits of group term insurance
Buying and providers
Which insurers offer group term life insurance in India?
Leading group term life insurers in India include HDFC Life, ICICI Prudential Life, Max Life, SBI Life, Tata AIA Life, Bajaj Allianz Life, Kotak Life, and LIC. Product features, claim settlement ratio, and rider menus vary. IRDAI publishes annual claim settlement data for life insurers. A broker like Plum places policies across major insurers.
Read more: Top group health insurance providers in India: provider landscape 2026
How do I buy group term life insurance for my company?
Approach an IRDAI-licensed corporate broker or a life insurer's group business desk. Share employee count, age distribution, and desired sum assured structure. Compare quotes on premium, claim settlement ratio, and rider options. Sign the proposal, pay premium, and receive the master policy. Employee onboarding happens through the broker's or insurer's HR portal.
Read more: How to protect your startup with group term life insurance
