Group Term Life Insurance

Best Group Term Life Insurance for your Employees

A one‑stop, data‑rich guide for Indian employers who want to protect their people, slash absenteeism, and convince CFOs with measurable ROI. Bookmark it now—refer back at renewal time.

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Claims processed
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Lives covered
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Companies covered

Why Group Health Insurance Matters

Imagine one of your employees falls seriously ill and needs immediate hospitalisation. Without insurance, a single hospital bill can run into lakhs. Now imagine the same employee is covered under a plan you bought for your team — the bill is mostly paid by the insurer, and the employee and their family are grateful to you for providing the cover. That is the power of group health insurance.
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In India, where personal health cover is still underused, employer-provided insurance is critical. According to IRDAI’s 2023–24 annual report, India’s insurance penetration (the percentage of GDP spent on insurance) was only 3.7%, with health insurance making up a big chunk of the non-life segment. That means most Indians don’t buy health insurance on their own — they rely on their employer.

For an employer, offering group health insurance is more than a perk. It’s a way to:
  • 01.

    Compete in the talent market

  • 02

    Retain employees longer

  • 03.

    Reduce absenteeism caused by health costs

  • 04.

    Build trust with your workforce

Table of contents

Why Group Term Life Insurance Matters in India

Life insurance penetration in India remains low — around 3–4% of GDP, according to IRDAI’s 2022–23 annual report. Despite growing awareness, millions of Indian families remain financially vulnerable if the primary earner dies unexpectedly. For employees, buying an individual term life policy often means high premiums, lengthy paperwork, or even medical tests that many avoid.
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This is where group term life insurance (GTLI) steps in. Purchased by an employer, GTLI provides employees with life cover from day one of employment, often without any health checks. It ensures that in the unfortunate event of an employee’s death — whether due to illness, accident, or natural causes — their nominee receives a lump-sum payout (the sum assured).

Why It Matters for Employers

  • Affordable benefit

    Premiums are low, especially when spread across a large workforce. For example, a ₹20 lakh cover may cost the employer less than ₹2,000 per employee annually.

  • Talent advantage

    Offering GTLI signals long-term care for employees’ families, helping companies attract and retain talent.

  • CSR and reputation

    In sectors like IT, BFSI, and startups backed by global investors, GTLI is increasingly seen as a core part of the employee value proposition (EVP).

Why It Matters for Employees

  • Family protection

    Families receive financial stability during the most difficult time — the loss of the breadwinner.

  • No medical underwriting

    Unlike retail life insurance, there are usually no medical tests or long forms.

  • Peace of mind

    Employees know that their loved ones are covered, even if they themselves have never bought personal life insurance.

The Coverage Gap in India

A 2023 survey by IRDAI found that nearly 70% of Indian adults have no personal life insurance. For many, the group term life cover provided by their employer is the only life insurance they have. This makes it a vital benefit, not just an optional perk.

In short: Group term life insurance bridges India’s life insurance gap. It protects employees’ families at a fraction of the cost of retail life insurance, while helping employers demonstrate genuine care.

What is Group Term Life Insurance?

At its core, group term life insurance (GTLI) is a single life insurance policy purchased by an employer to cover all its employees. Instead of each employee buying a personal term life plan individually, the company negotiates a master policy with an insurer. Every employee is then automatically covered under this umbrella, usually from the day they join the organisation.

How It Differs from Individual Term Life Insurance

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  • Retail term life insurance

    Purchased directly by individuals. Requires medical tests and health declarations. Premiums are based on age, lifestyle, and personal risk factors.

  • Group term life insurance

    Purchased by employers for their workforce. Premiums are pooled and far cheaper on a per-employee basis. Most employees don’t need to undergo health checks, and coverage starts immediately.

What Does It Cover?

  • Death due to any cause

    natural, illness, or accident.

  • Worldwide coverage

    protection applies whether the employee is in India or abroad.

  • Riders (optional add-ons)

    accidental death benefits, critical illness cover, permanent disability cover, waiver of premium.

Common Models of Coverage

  • 1. Fixed Sum Assured

    Each employee receives the same cover (e.g., ₹20 lakh each).

  • 2. Salary-Linked Cover:

    The sum assured is tied to the employee’s salary, usually a multiple (e.g., 3x or 5x annual CTC).

👉 Fixed cover is simpler for SMEs, while salary-linked models are popular in enterprises with wide pay scales.

A Simple Example

A company with 100 employees purchases group term life insurance with a fixed sum assured of ₹25 lakh per employee. Unfortunately, one employee passes away due to a sudden illness. The nominee receives ₹25 lakh as a lump-sum payout, helping the family manage immediate expenses and long-term financial stability.

Why Employees Value GTLI

For many Indian employees, this is their first-ever life insurance policy. Retail life insurance in India still suffers from low awareness and trust issues, but group term life is automatic — no forms, no waiting, and no health checks.

In summary: Group term life insurance is a master policy that protects employees’ families from financial hardship in the event of untimely death. It’s cost-effective for employers, simple for employees, and increasingly seen as a core workplace benefit in India.

How Group Term Life Insurance Works

When a company buys group term life insurance (GTLI), it signs a single master policy with an insurance company. This policy covers all eligible employees under one umbrella, instead of each employee needing to buy their own life insurance. Coverage begins automatically as soon as the employee joins the organisation and continues as long as they remain on the payroll.

The Master Policy Model

  • The employer is the policyholder.

  • The employees are the insured members.

  • A single premium is paid (usually annually) by the employer, often based on workforce demographics.

  • Employees don’t have to fill in forms or undergo medical tests unless they opt for additional voluntary cover.

Automatic Enrollment from Day One

New employees are added to the policy from their date of joining, ensuring families are protected immediately. Similarly, when an employee resigns or retires, coverage ends right away.

Sum Assured Models

Employers choose how much coverage each employee gets. Two common approaches are:

  • 1. Fixed Sum Assured

    Every employee gets the same cover (e.g., ₹10 lakh each).

  • 2. Salary-Linked Cover

    The cover is linked to annual salary, usually 3–5x CTC. This ensures higher earners (with bigger financial responsibilities) have larger protection.

Duration of Cover

  • Coverage is active only during employment.

  • Once an employee leaves, the cover stops (though some insurers allow conversion to an individual term plan).

Premium Payment

  • Premiums are typically paid fully by the employer as part of the benefits package.

  • Some organisations allow employees to “top up” with extra voluntary life cover at their own cost.

What Triggers a Claim

If an insured employee passes away (due to illness, accident, or natural causes), the nominee registered with HR receives the lump-sum payout. This money can be used for immediate household expenses, children’s education, debt repayment, or long-term family security.

Example

An SME in Bengaluru with 200 employees buys a GTLI policy with a fixed cover of ₹25 lakh per employee. Unfortunately, one employee dies due to a heart attack. The insurer directly pays the nominee ₹25 lakh within a few weeks of receiving the claim documents. The premium for this coverage cost the employer less than ₹2,000 per employee annually.

In summary: Group term life insurance works as a low-cost, high-value group policy where employees are automatically covered, families are protected, and employers demonstrate care — all with minimal administration.

Benefits for Employers and Employees

Like group health insurance, group term life insurance (GTLI) is a win–win benefit. Employers provide a cost-effective perk that enhances retention, while employees gain vital financial security for their families.

Benefits for Employers

  • 1. Affordable way to show care

    Premiums are remarkably low compared to individual term insurance. For instance, a ₹20–25 lakh cover may cost just ₹1,000–₹2,000 per employee annually. That’s a fraction of payroll cost, but a huge reassurance for staff.

  • 2. Talent attraction and retention

    In competitive industries, benefits often influence job decisions. Adding GTLI signals long-term commitment to employees and their families, which boosts both recruitment and retention.

  • 3. Stronger Employer Value Proposition (EVP)

    Today’s workforce looks for employers who care beyond the workplace. Offering life cover positions a company as responsible and employee-first — not just profit-driven.

  • 4. CSR and compliance edge

    While not legally mandated, group term life insurance aligns with global standards of employee care. For multinationals and well-funded startups, it helps match international EVP benchmarks.

  • 5. Minimal administration

    Unlike health insurance, GTLI has fewer claims in absolute numbers. Enrolment, renewals, and claims are straightforward, reducing HR overhead.

Benefits for Employees

  • 1. Financial protection for family

    The biggest benefit: if the breadwinner dies, the family receives a lump-sum payout (the sum assured). This payout can cover living expenses, debts, children’s education, or other immediate needs

  • 2. No medical tests or underwriting

    In India, many employees avoid buying retail term insurance due to medical test requirements. With GTLI, employees are automatically covered from day one, no matter their health status.

  • 3. Peace of mind

    Employees know their families won’t be left vulnerable. This reduces personal stress and improves workplace engagement.

  • 4. Inclusive cover

    Policies cover death due to any cause — illness, natural, or accidental — offering comprehensive protection without complicated exclusions.

  • 5. Option to add riders

    Employees can get enhanced protection if the employer negotiates riders like accidental death benefit or critical illness cover.

A Quick Story

Ramesh, a 35-year-old engineer at an IT company, suddenly passed away due to cardiac arrest. His employer had a GTLI policy with a fixed ₹20 lakh cover per employee. Within a month, Ramesh’s family received the payout, which helped cover immediate expenses, repay a housing loan, and secure his children’s school fees. For the company, the annual cost of providing this cover was under ₹2,000 per employee — but for Ramesh’s family, it was life-changing support.

In summary:

  • Employers get a cost-effective, high-perception benefit that strengthens loyalty and brand reputation

  • Employees get immediate, hassle-free financial protection for their families.

This makes group term life insurance one of the simplest yet most impactful employee benefits in India.

Why Choose Plum for Group Term Life Insurance (GTLI)

Group Term Life Insurance provides financial support to an employee’s family in case of death — but most traditional policies are rarely explained or updated. Plum makes life cover easier to implement, manage, and claim.

1. Fast Setup and Clear Nominee Records

  • Policies go live in 1–3 days after census submission.
  • Employees can update nominee details digitally (no paper forms).
  • HR dashboards reduce errors and ensure nominee data is always current.

2. Strong Claims Support and Trust

  • YourStory (2022) reported Plum’s Claims NPS at 79, one of the highest in the insurance space.
  • When a claim arises, Plum coordinates between family, insurer, and employer — ensuring documents (death certificate, bank details, claim form) are handled promptly.

3. Customisable Cover: Flat or Salary-Linked

Employers can choose between:
✔ Fixed cover (e.g., ₹20 lakh for all employees)
✔ Salary-linked cover (e.g., 3× or 5× annual CTC)
✔ Optional riders: accidental death, disability, critical illness

4. Continuity Options for Employees Leaving

Employees can convert group cover into an individual term policy within 30 days of exit, as per insurer rules — ensuring families don’t lose protection overnight.

Policy Features and Riders Explained

While the base of group term life insurance (GTLI) is simple — financial protection in case of death — the real value comes from its features and riders. These additions can customise the policy to suit different employee demographics and business needs.

Core Features of GTLI

1. Death Due to Any Cause

  • Covers death caused by illness, natural reasons, or accidents.
  • Worldwide coverage: valid whether the employee is in India or abroad.

2. Automatic Coverage

  • Employees are added from their date of joining, no medical checks required.
  • Coverage ends immediately when they leave the organisation.

3. Large Sum Assured at Low Premium

  • Typical cover: ₹20–50 lakh per employee.
  • Premium cost: ₹1,000–₹2,500 annually per employee, depending on workforce demographics.

4. Employer-Funded

  • Premiums are usually paid by the employer as part of benefits.
  • Some employers allow employees to buy additional voluntary cover at their own cost.

Common Riders in Group Term Life Insurance

Employers can enhance the base policy with optional riders (at slightly higher premiums).

1. Accidental Death Benefit Rider (ADB)

  • Provides an extra payout if death occurs due to an accident.
  • Example: If base cover is ₹20 lakh and ADB is added, nominee may receive ₹40 lakh in case of accidental death.

2. Critical Illness Rider

  • Provides a lump-sum payout if the employee is diagnosed with a listed critical illness (e.g., cancer, heart attack, stroke).
  • This benefit is paid while the employee is alive, helping manage treatment costs.

3. Disability Rider

  • Covers permanent total disability (loss of both limbs, loss of eyesight) or partial disability.
  • Provides financial support when employees can no longer work.

4. Waiver of Premium Rider

  • In case of disability or loss of income, future premiums for the employee’s cover are waived, ensuring the policy continues.

Why Riders Matter

  • Younger workforces may value critical illness and accidental death riders.
  • Older demographics may benefit more from waiver of premium options.
  • High-risk industries (logistics, construction) often add accidental and disability riders.

Example of Riders in Action

A mid-sized logistics company bought GTLI with ₹25 lakh base cover plus an accidental death benefit rider. When a driver died in a road accident, his family received ₹50 lakh (₹25 lakh base + ₹25 lakh rider). For the employer, the extra rider increased premiums by only ₹300 per employee annually — but doubled the benefit for families in the worst-case scenario.

Takeaway:
The base cover of group term life insurance provides essential financial security. But riders allow employers to tailor policies for their workforce, ensuring broader protection at a relatively small additional cost.

Sum Assured Models

One of the most important choices employers make when setting up group term life insurance (GTLI) is deciding how much coverage (the sum assured) each employee should get. This directly affects premiums, but more importantly, it determines how financially secure an employee’s family will be in the event of their death.

The Two Common Models

1. Fixed Sum Assured

  • Every employee receives the same cover amount, regardless of salary or role.
  • Example: Each employee is insured for ₹20 lakh.
  • Best suited for small teams or startups with relatively flat salary structures.

Advantages:

  • Simple to understand and administer.
  • Equal treatment across the workforce.
  • Predictable premium costs for employers.

Limitations:

  • May under-insure senior employees with higher financial responsibilities.
  • May over-insure very junior staff relative to their needs.

2. Salary-Linked Sum Assured

  • Coverage is a multiple of the employee’s annual salary (e.g., 3x, 5x, or 10x CTC).
  • Example: An employee earning ₹10 lakh annually with a 5x model would be insured for ₹50 lakh.

Advantages:

  • More equitable — aligns coverage with financial responsibilities.
  • Appeals to higher-paid employees who expect larger cover.

Limitations:

  • Increases premium variability as workforce salaries change.
  • More complex to explain and administer compared to fixed cover.

Choosing the Right Model

The right model depends on workforce demographics and company philosophy:

  • Startups and SMEs: Fixed cover works well for simplicity and cost control.
  • Large enterprises: Salary-linked models provide tailored protection and are often preferred in industries like IT, BFSI, and consulting.
  • Hybrid approach: Some companies offer a base fixed cover (e.g., ₹20 lakh for all) plus an additional salary-linked rider.

Example

A 300-employee IT company adopted a salary-linked model (3x annual CTC). A junior engineer earning ₹6 lakh received ₹18 lakh cover, while a senior manager earning ₹25 lakh received ₹75 lakh. Premiums were higher than a flat ₹20 lakh cover for all, but employees viewed the plan as fairer and more personalised.

Takeaway:

  • Fixed cover = simple, cost-predictable, equal for all.‍
  • Salary-linked cover = more personalised, fair, but costlier and more complex.

    Employers should balance affordability with fairness, keeping in mind that the sum assured should provide meaningful financial protection for employees’ families.

Inclusions vs Exclusions

Every insurance policy has boundaries — what it covers and what it doesn’t. For employers, clearly understanding the inclusions and exclusions of group term life insurance (GTLI) helps set the right expectations with employees and avoid disputes at claim time.

Common Inclusions

Group term life insurance generally provides broad coverage:

1. Death due to natural causes

  • Covers death resulting from illness, disease, or natural health conditions.
  • Example: Death due to cardiac arrest or cancer is included.

2. Death due to accidents

  • Covers accidental deaths, whether at work, on the road, or elsewhere.
  • Some employers add an accidental death benefit rider to increase payouts.

3. Death due to illness

  • Includes communicable diseases (e.g., dengue, COVID-19) or non-communicable diseases (e.g., diabetes, stroke).

4. Worldwide coverage

  • Employees are covered whether they’re in India or abroad on work assignments.

Common Exclusions

Despite wide coverage, there are some exclusions — these exist to keep premiums affordable and prevent misuse.

1. Suicide within the first year

  • Death due to suicide within the first 12 months of coverage is excluded under most GTLI policies.

2. Death due to war or terrorism

  • Deaths caused by active participation in war, terrorism, or riots are usually excluded.

3. Criminal activity or hazardous acts

  • Death resulting from illegal activities, intoxication, or reckless acts (e.g., drag racing) is not covered.

4. Non-disclosure of material facts

  • If an employee hides a serious illness during enrolment (rare in GTLI since medical checks are usually waived), the claim could be disputed.

Why Exclusions Exist

  • To prevent fraudulent claims or misuse.
  • To keep premiums low for employers.
  • To exclude extraordinary risks that aren’t insurable under standard terms.

A Quick Example

A 34-year-old employee passes away from dengue fever. His nominee receives the full ₹20 lakh cover under the company’s GTLI policy, since illness-related deaths are included. In contrast, if an employee dies due to participating in unlawful racing, the claim would likely be excluded.

Takeaway:

  • Inclusions: Death due to natural causes, accidents, illness — broad and comprehensive.‍
  • Exclusions: Suicide in first year, unlawful activity, war/terrorism risks.

Clear communication is key. Employers should ensure employees and nominees understand the boundaries of cover to avoid surprises later.

How to Compare Group Term Life Insurance Plans

Not all group term life insurance (GTLI) policies are the same. On paper, they may look similar — same sum assured, similar premiums — but the fine print can make a huge difference for employees and their families. A smart comparison goes beyond cost to focus on reliability, flexibility, and service.

1. Premium vs Coverage

  • Don’t just look for the cheapest premium.
  • Consider the sum assured model: fixed vs salary-linked.
  • Ensure the cover is meaningful: a ₹10 lakh cover may not be sufficient in metro cities where living costs and liabilities (loans, children’s education) are high.

👉 Example: A ₹20 lakh cover costs around ₹1,200 per employee annually. Spending an extra ₹300 to double coverage to ₹40 lakh may deliver disproportionate value for families.

2. Claim Settlement Ratio (CSR)

  • CSR shows how many claims an insurer settles versus those received.
  • Look for insurers with 95%+ CSR for life insurance (check IRDAI’s annual reports: IRDAI Official Site).
  • A high CSR indicates reliability — critical for a benefit that’s only tested during tragic circumstances.

3. Policy Flexibility

  • Can the employer choose between fixed or salary-linked sum assured?
  • Are riders available (accidental death, critical illness, waiver of premium)?
  • Can employees top up their own cover voluntarily?

4. Claim Process and Timelines

  • Life insurance claims are deeply sensitive. Families shouldn’t wait months.
  • Confirm average claim turnaround time (IRDAI mandates 30 days after complete documentation).
  • Check whether the insurer handles claims directly or via intermediaries.

5. Digital Tools and Support

  • Dashboards for HR to add/remove employees.
  • Employee portals for nominees to access claim steps.
  • Transparency in claim status tracking reduces stress for families.

6. Value-Added Services

Some insurers bundle extra features:

  • Grief counselling support for families.
  • Financial planning sessions for nominees receiving payouts.
  • Employee assistance programs (EAPs) integrated into the policy.

While these aren’t core insurance functions, they enhance the employee experience at little extra cost.

Sample Comparison Table

Feature Insurer A Insurer B Insurer B
Sum Assured ₹20 lakh fixed 5x salary ₹25 lakh fixed
Riders Accidental Death Critical Illness ADB + Disability
CSR (Life) 97% 95% 94%
Claim Turnaround 15 days 25 days 30 days
Digital Portal Yes Yes No
Premium (per employee/year) ₹1,200 ₹1,800 ₹1,500

Employer Tip

Always request at least 3–4 insurer quotes and make a side-by-side comparison. Focus less on shaving a few hundred rupees off the premium and more on settlement reliability and coverage adequacy.

Takeaway:
The best group term life insurance policy is not always the cheapest. Look for high settlement ratios, flexible coverage models, rider options, and a smooth claims experience. After all, this is a benefit that matters most during life’s hardest moments.

How to Buy Group Term Life Insurance: Step-by-Step Guide

For many companies, purchasing group term life insurance (GTLI) is their first step into structured employee benefits beyond health cover. The process may seem complex at first, but it can be broken down into clear, manageable steps.

Step 1: Assess Workforce Needs

  • Team demographics: Younger workforces may not prioritise high cover, but senior employees often expect it.
  • Financial responsibilities: Consider average loans, dependents, and cost of living in your workforce’s locations.
  • Company philosophy: Decide if you want a flat, equal cover for all (fairness) or salary-linked cover (equity).

👉 Example: A startup with 40 employees chose a flat ₹20 lakh cover to keep things simple.

Step 2: Decide the Sum Assured Model

Choose between:

  • Fixed sum assured: Equal cover for all employees.
  • Salary-linked cover: A multiple of annual CTC (e.g., 3x, 5x).

This choice affects not just premiums but also employee perception of fairness.

Step 3: Collect Employee Census Data

Insurers will need a basic census, including:

  • Employee names, ages, genders
  • Salary details (if salary-linked model is chosen)
  • Number of employees in scope

This data helps insurers calculate premiums accurately.

Step 4: Request Multiple Quotes

Approach at least 3–4 insurers directly or via a broker. Compare not just premiums but also:

  • Claim settlement ratio (CSR)
  • Riders offered (accidental death, critical illness, disability)
  • Claim turnaround times
  • Digital administration support

Step 5: Negotiate Riders and Add-Ons

Enhance base cover with affordable riders, such as:

  • Accidental death benefit (doubling payout for accidental deaths).
  • Critical illness rider (lump-sum payout on diagnosis).
  • Waiver of premium (ensures continuity if employee is disabled).

Step 6: Finalise Policy Terms

  • Share the employee census with the chosen insurer.
  • Agree on sum assured structure, riders, and premium terms.
  • Issue the policy schedule and master contract.

Step 7: Educate Employees

Insurance is only valuable if employees and their families understand it. Communicate clearly:

  • The cover amount.
  • Who the nominee is and how to update details.
  • Claim process (with a simple FAQ or one-pager).

👉 Example: A fintech firm introduced GTLI with ₹25 lakh fixed cover. They held a 30-minute induction session for employees and gave each a FAQ sheet. This small step reduced confusion later during claims.

Step 8: Review and Renew Annually

  • Track premiums vs claims.
  • Reassess whether the sum assured is still adequate (inflation, new loans, changing demographics).
  • Explore better riders or additional voluntary options for employees.

Key Employer Tip

Don’t treat GTLI as a one-time checkbox. Revisit your policy each year to ensure it still reflects workforce needs and remains competitive in your industry.

Takeaway:
Buying group term life insurance isn’t complicated. With a clear step-by-step process — from workforce assessment to employee education — companies can put in place a benefit that costs little but offers families life-changing protection.

Premiums and Cost Factors

One of the biggest advantages of group term life insurance (GTLI) is that it provides high-value coverage at a surprisingly low cost. But premiums aren’t one-size-fits-all — they vary based on workforce demographics, policy design, and additional riders.

Typical Premium Range in India

  • For a ₹20–25 lakh cover per employee: ₹1,000–₹2,500 annually per employee.
  • For higher covers (₹50 lakh+): ₹3,000–₹5,000 annually per employee.
    👉 Compared to retail term insurance (which may cost ₹10,000–₹20,000 annually for the same cover, depending on age and health), GTLI is significantly more cost-effective.

Key Factors That Influence Premiums

1. Workforce Age Profile

  • Younger workforces = lower premiums.
  • Older employees (above 45) raise costs due to higher mortality risk.

2. Sum Assured Model

  • Fixed cover: predictable premium per employee.
  • Salary-linked cover: more variable, since high earners drive up average cover amounts.

3. Workforce Size

  • Larger groups get better risk pooling and lower per-employee premiums.
  • Small teams (under 20) may see slightly higher costs due to lower risk spread.

4. Industry Risk Profile

  • IT/consulting sectors = lower risk, cheaper premiums.
  • Logistics, construction, and high-risk industries = higher premiums.

5. Riders and Add-Ons

  • Accidental death benefit: increases premiums by ~10–15%.
  • Critical illness rider: adds ~20–30%.
  • Waiver of premium: small addition (~2–5%).

6. Past Claim Experience

  • Insurers review claim history at renewal.
  • High claims → “loading” (premium hikes).
  • Low claims → potential for discounts or negotiations.

Example Premium Scenarios

Startup (50 employees, average age 29, IT sector):

  • Fixed cover of ₹20 lakh.
  • Premium: ~₹1,200 per employee annually.

Manufacturing SME (200 employees, average age 35):

  • Salary-linked cover: 3x annual CTC.
  • Average cover ~₹30 lakh.
  • Premium: ~₹2,500 per employee annually.

Large Enterprise (1,000 employees, average age 32, BFSI):

  • Fixed cover: ₹50 lakh with accidental death rider.
  • Premium: ~₹3,800 per employee annually.

Why It’s Affordable for Employers

  • Risk is spread across a group, reducing per-person costs.
  • Minimal underwriting keeps administration low.
  • Tax deductions (as business expenses) make GTLI even more cost-efficient.

Takeaway:
Group term life insurance offers substantial coverage at low cost, with premiums shaped mainly by employee demographics, coverage model, and riders. Employers should balance affordability with adequacy — ensuring the sum assured is enough to provide meaningful protection for families.

Portability and Continuity

One of the most common questions employees ask is: “What happens to my group term life insurance if I leave the company?” Unlike personal term plans, group term life insurance (GTLI) is tied to employment. This means coverage usually ends the moment an employee resigns, retires, or is terminated.

But there are ways to continue life cover without starting over.

Why GTLI Isn’t Automatically Portable

  • The employer is the policyholder, not the employee.
  • Premiums are negotiated based on the group’s collective profile, not individual risk.
  • Once an employee leaves, they’re no longer part of that insured group.

Conversion to Individual Term Plans

Many insurers allow outgoing employees to convert group cover into an individual term life policy.

  • The employee must apply within 30 days of exit.
  • No fresh medical underwriting is usually required if conversion happens immediately.
  • Premiums shift to retail rates (higher than group premiums but still valuable for continuity).

👉 Example: Ravi, 45, leaves his job after 10 years. If he applied fresh for a term plan, his age and medical history could raise premiums significantly. By migrating his GTLI to an individual policy, he retains cover without delays or medical checks.

Portability Between Insurers

Unlike health insurance, where “portability” between insurers is common, in term life insurance it’s rare. The practical option for most employees is converting their group cover into an individual plan with the same insurer.

Employer Best Practices

  • Communicate clearly: HR should inform employees that coverage ends on their last working day.
  • Support migration: Share insurer contact details and explain the 30-day window.
  • Offer voluntary top-up options: Some companies let employees add voluntary life cover (at their own cost) that can continue after exit.

Why This Matters for Employees

  • Sudden loss of cover can leave families unprotected.
  • Buying fresh retail term insurance later in life may be costly or even declined due to health conditions.
  • Migration ensures families don’t lose continuity of protection.

Takeaway:
Group term life insurance ends with employment, but most insurers allow a conversion option into an individual plan. Employers who educate staff about this option help employees maintain peace of mind, even beyond their tenure.

Digital Administration

Traditionally, managing insurance benefits meant paperwork, Excel sheets, and long back-and-forth with insurers. But modern group term life insurance (GTLI) is increasingly supported by digital tools, making administration easier for HR and more transparent for employees.

For Employers & HR Teams

1. Digital Dashboards
 Most insurers or brokers provide HR portals where administrators can:

  • Add or remove employees instantly.
  • Update nominee details when employees request changes.
  • Download policy schedules and certificates.
  • Track premium payments and renewal dates.

2. HRMS Integration
 Some providers integrate directly with the company’s HRMS (Human Resource Management System).

  • New employees are automatically enrolled when added to payroll.
  • Exits automatically trigger removal from coverage.
  • Nominee details can be synced directly from employee records.

3. Claims Tracking
 Employers can monitor ongoing claims — which stage they’re in (documents received, under review, approved, or paid out). This visibility ensures families aren’t left waiting in uncertainty.

For Employees

1. E-Certificates & Nominee Records
 Employees can access their coverage details digitally. Many insurers issue e-certificates showing:

  • Sum assured.
  • Policy validity.
  • Registered nominee details (critical in case of claim).

2. Self-Service Portals
 Employees (and nominees) can log in to:

  • Check coverage amount.
  • Update or confirm nominee details.
  • Download FAQs and claim forms.

3. Claim Support
 Digital claim submission allows nominees to upload scanned documents online, reducing delays. Insurers also provide helplines or chatbots for step-by-step assistance.

Why Digital Matters

  • For HR: Saves time, reduces manual errors, ensures compliance.
  • For Employees: Peace of mind that their cover and nominee details are updated.
  • For Families: Faster claim settlements through digital workflows.

Example

A 250-employee IT startup in Hyderabad moved to a digital-first insurer for GTLI. Employees could log in and update their nominee details online — something that previously required paper forms and HR approval. During one unfortunate claim, the nominee’s details were already up-to-date in the system, and the insurer settled the ₹30 lakh payout within 18 days, without additional back-and-forth.

Takeaway:
Digital administration transforms group term life insurance from a static paper policy into a transparent, employee-friendly benefit. Employers should prioritise insurers who offer real-time dashboards, HRMS integration, and digital claims support.

Claim Process Explained

The true test of group term life insurance (GTLI) comes during a claim. This is when an employee’s family (the nominee) depends on the policy for financial stability. A smooth, transparent, and timely claims process is critical — both for the family and for the employer’s reputation.

Who Can File a Claim?

The nominee registered by the employee at the time of policy enrolment is the primary claimant. If no nominee has been declared, legal heirs may step in, though this process is lengthier and may require additional legal documentation.

Step-by-Step Claim Process

Step 1: Intimation of Claim

  • The nominee or HR informs the insurer of the employee’s death.
  • Most insurers now allow this online through portals, apps, or helplines.

Step 2: Submission of Documents
 Commonly required documents include:

  • Claim form (provided by insurer).
  • Death certificate issued by the local authority.
  • Policy details (master policy number).
  • Nominee’s identity and address proof.
  • Hospital or medical records, if death was due to illness.
  • Police FIR/post-mortem report if death was accidental.

Step 3: Verification by Insurer
 The insurer verifies details such as:

  • Employee’s coverage under the master policy.
  • Validity of nominee details.
  • Cause of death (to confirm it’s within policy inclusions).

Step 4: Settlement

  • As per IRDAI guidelines, insurers must settle claims within 30 days of receiving all necessary documents.
  • If an investigation is required (e.g., for unclear cause of death), it must be completed within 90 days, and payment made within 30 days thereafter.

Step 5: Payout

  • The sum assured (e.g., ₹20 lakh or ₹50 lakh) is paid directly into the nominee’s bank account.
  • Payouts under life insurance are tax-free under Section 10(10D) of the Income Tax Act.

Common Reasons for Claim Delays or Rejections

  • Nominee not registered or details outdated.
  • Submission of incomplete or incorrect documents.
  • Exclusions applying (e.g., suicide in first policy year).
  • Non-disclosure of material facts (rare in GTLI since underwriting is minimal).

Role of HR During Claims

  • Guide the nominee in gathering and submitting documents.
  • Provide the employee’s coverage details quickly.
  • Act as the liaison between the family and insurer.

Example

When a 42-year-old employee at a Gurugram IT firm passed away due to cardiac arrest, his nominee (wife) filed a claim with the insurer. With HR support, she submitted the death certificate, nominee ID proof, and claim form online. The insurer verified documents and settled the ₹25 lakh claim within 18 days, well within IRDAI’s mandated timeline.

Takeaway:
The GTLI claim process is designed to be simple and compassionate. Employers should ensure nominee details are always updated, and families are aware of the process — because during such times, clarity and speed make all the difference.

Tax Benefits of Group Term Life insurance

One of the lesser-discussed but important advantages of group term life insurance (GTLI) is its tax treatment. Both employers and employees benefit in different ways, making it not only a protective policy but also a financially efficient one.

Tax Benefits for Employers

1. Premiums are a Business Expense

  • Premiums paid by the employer for group term life insurance are treated as a business expense under Section 37(1) of the Income Tax Act, 1961.
  • This means the cost is deductible when calculating taxable profits, reducing the employer’s overall tax liability.

👉 Example: If an SME pays ₹10 lakh annually in GTLI premiums, that amount is deducted from its profits before income tax is applied.

2. Input Tax Credit (ITC) under GST (in limited cases)

  • If structured properly and if the premium qualifies as part of business expenditure under GST law, some employers may claim ITC on GST paid. However, this depends on whether the benefit is mandated under law or offered voluntarily.

Tax Benefits for Employees

1. Employer-Paid Premium is Tax-Free

  • When the employer fully pays the premium, employees are not taxed on this benefit. It’s not treated as a perquisite (unlike some allowances).

2. Death Benefit is Tax-Free

  • The sum assured received by the nominee in the event of an employee’s death is completely exempt from tax under Section 10(10D) of the Income Tax Act.
  • This ensures that families get the full payout without deductions.

Voluntary Top-Up by Employees

Some employers allow staff to buy extra life cover (on top of the base employer-funded sum assured).

  • If employees pay the premium themselves, they can claim tax deductions under Section 80C, subject to the overall annual limit of ₹1.5 lakh.

Why This Matters

  • For employers: GTLI premiums reduce taxable income and act as a cost-efficient retention tool.
  • For employees: Payouts are tax-free, ensuring maximum financial protection reaches their families.

Example

A Bengaluru IT firm pays ₹1,500 per employee annually for GTLI, with a fixed cover of ₹25 lakh. The company treats the ₹30 lakh annual premium (for 200 employees) as a deductible business expense. Sadly, when one employee passed away due to cancer, his nominee received the full ₹25 lakh payout. This amount was completely tax-free, giving the family immediate financial support.

Takeaway:
Group term life insurance not only protects families but also offers meaningful tax efficiency. Employers save through business expense deductions, while employees’ families receive payouts that are entirely tax-free under Indian law.

Regulatory Context

Like all insurance products in India, group term life insurance (GTLI) is governed by the Insurance Regulatory and Development Authority of India (IRDAI). The regulator ensures policies are transparent, fair, and reliable — especially since GTLI deals with sensitive claims that affect employees’ families during the most difficult times.

Role of IRDAI

  • Sets the rules for design and servicing of group term policies.
  • Mandates claim settlement timelines — insurers must settle claims within 30 days of receiving all documents.
  • Monitors claim settlement ratios (CSR) and requires insurers to publish them annually (IRDAI Annual Reports).
  • Regulates insurers and TPAs (Third Party Administrators) to ensure compliance and protect consumers.

Group vs Retail Regulation

  • Customisation allowed: Unlike retail term life policies, group policies can be customised (e.g., sum assured models, riders, optional parental covers).
  • No individual underwriting: Employees are covered without medical tests, but this is permitted because risks are pooled across a group.
  • Employer as policyholder: Employers control design, but must ensure employees are informed of cover and nominee registration.

Claims Protection

  • If a claim is delayed beyond 30 days without valid reasons, insurers must pay interest on the claim amount (as per IRDAI rules).
  • Investigations (if required) must be completed within 90 days.

Migration and Continuity Rules

  • Employees leaving a company can request to convert group cover into an individual plan with the same insurer.
  • This must be done within 30 days of exit.
  • IRDAI guidelines allow portability in principle, though actual terms depend on the insurer.

Employer Responsibilities

  • Maintain updated employee and nominee data.
  • Share policy details and claim processes transparently.
  • Ensure premiums are paid on time to avoid lapses.

Example

An SME delayed sharing updated nominee details with its insurer, leading to a 2-month delay in processing a claim. IRDAI guidelines required the insurer to eventually pay the claim with interest to the nominee. This highlighted why HR’s role in maintaining accurate records is as important as the insurer’s role in claim settlement.

Takeaway:
IRDAI provides a robust regulatory framework for group term life insurance — ensuring employees are covered without hassles, claims are settled fairly and quickly, and employers act responsibly as policyholders. This regulatory backing makes GTLI one of the most trustworthy benefits employers can offer.

Industry-Specific Use Cases

While the core purpose of group term life insurance (GTLI) — protecting employees’ families financially — remains the same across industries, the way it is designed and valued can differ depending on workforce risks, demographics, and expectations.

Startups and Small Businesses

  • Challenge: Limited budgets but need to attract and retain talent against larger competitors.
  • Use of GTLI: Startups often opt for fixed sum assured policies (₹20–25 lakh) for all employees.
  • Impact: Even a modest cover is perceived as a valuable benefit, helping improve employer branding without stretching payroll costs.

Example: A 40-member fintech startup in Bengaluru offered a ₹20 lakh GTLI policy at a cost of ~₹1,200 per employee annually. In surveys, employees ranked the policy among the top three benefits provided by the company.

Large Enterprises (IT, BFSI, Consulting)

  • Challenge: Diverse workforce with varied income levels and expectations.
  • Use of GTLI: Salary-linked models (e.g., 3x–5x annual CTC) are common. Riders such as accidental death and critical illness are often added.
  • Impact: Ensures higher earners with bigger financial responsibilities get meaningful cover, aligning with global EVP standards.

Example: A multinational IT firm in Gurugram provided coverage equal to 5x annual CTC. For a manager earning ₹20 lakh, this translated to ₹1 crore cover, while junior employees received proportionately lower sums.

Manufacturing and Industrial Workforces

  • Challenge: Higher workplace risks (accidents, occupational hazards).
  • Use of GTLI: Employers often combine GTLI with Group Personal Accident Insurance (GPAI). Riders like accidental death and disability are considered essential.
  • Impact: Families are financially protected whether death is due to illness or accident, reducing tension in high-risk roles.

Example: An auto components manufacturer in Pune added an accidental death benefit rider to its ₹25 lakh GTLI policy. This doubled the payout to ₹50 lakh in case of accidental death, at only ~10% higher premium.

Logistics and Transportation

  • Challenge: Employees frequently on the move, facing road accident risks.
  • Use of GTLI: GTLI paired with accidental death and disability riders. Employers may also provide higher flat covers (₹30–40 lakh) because of elevated risk profiles.
  • Impact: Builds trust among employees’ families, crucial in industries with challenging working conditions.

Healthcare and Education

  • Challenge: Employees value family-focused benefits.
  • Use of GTLI: Some employers add voluntary top-up options, allowing staff to buy extra cover for dependents at discounted group rates.
  • Impact: Affordable access to life insurance in sectors where individual penetration is still low.

High-Risk Sectors (Construction, Mining, Oil & Gas)

  • Challenge: High incidence of workplace accidents and fatalities.
  • Use of GTLI: Very high covers (₹50 lakh–₹1 crore) with compulsory accidental riders. Sometimes combined with employer’s liability insurance.
  • Impact: Essential for compliance with global safety standards and to reassure employees’ families in high-risk jobs.

Takeaway:

  • Startups/SMEs use GTLI for talent attraction.
  • Large corporates use it for EVP benchmarking and fairness via salary-linked covers.
  • Industrial/logistics sectors rely on riders for accident-heavy roles.
  • High-risk industries see GTLI as non-negotiable, combining it with GPAI for full protection.

Group term life insurance can be customised by sector, proving its flexibility as an employee benefit.

Case Studies: How Companies Use Group Term Life Insurance

Case studies show how different companies — from startups to large enterprises — can design group term life insurance (GTLI) policies to fit their needs. These examples are illustrative, but highlight real-world impact on employees and their families.

Case Study 1: Startup Offering Affordable Security

Company: A 50-member SaaS startup in Bengaluru.
Challenge: Competing for talent against large IT firms with deeper pockets.
Solution: Introduced a fixed ₹20 lakh GTLI policy for all employees. No riders were added to keep premiums affordable.
Outcome: At an annual cost of ~₹1,200 per employee, the company created a strong EVP differentiator. In employee surveys, over 70% rated life cover as a key reason for staying longer with the company.

Case Study 2: Manufacturing SME with Accident Risk

Company: Auto-parts manufacturer in Pune with 300 employees.
Challenge: Shop-floor staff faced higher accident risk.
Solution: Offered ₹25 lakh GTLI per employee, plus an Accidental Death Benefit Rider (ADB), doubling payouts in case of accident.
Outcome: When a machine-related accident tragically led to an employee’s death, his family received ₹50 lakh (₹25 lakh base + ₹25 lakh rider). The total extra cost to the employer was just 12% higher in premiums, but the goodwill generated was immeasurable.

Case Study 3: Large IT Services Company

Company: A 5,000-employee IT firm in Gurugram.
Challenge: Workforce with varied salaries and financial responsibilities.
Solution: Salary-linked GTLI: 4x annual CTC for all employees, plus a voluntary top-up option for those who wanted more cover.
Outcome: Senior managers received cover in crores, while junior staff received proportionate protection. Over 800 employees opted for voluntary top-ups, making GTLI a flexible benefit. HR reported a 15% rise in satisfaction scores for benefits in the following year.

Case Study 4: Logistics Company with On-Road Employees

Company: A logistics operator with 800 drivers and warehouse staff.
Challenge: High accident exposure due to road travel.
Solution: ₹30 lakh fixed GTLI per employee, bundled with both Accidental Death and Permanent Disability riders.
Outcome: In a single year, two claims (one death, one disability) were filed. Families were supported with prompt payouts, and the disability rider ensured one employee continued receiving partial financial support. This strengthened trust among employees in a high-risk sector.

Insights Across Case Studies

  • Startups: Affordable fixed cover builds trust without straining budgets.
  • SMEs in manufacturing/logistics: Riders are essential to address higher risks.
  • Large enterprises: Salary-linked or hybrid models work best for fairness.
  • High-risk jobs: Disability riders and higher flat covers show employer responsibility.

Takeaway:
Group term life insurance adapts to different industries and company sizes. Whether it’s a ₹20 lakh starter policy for a small team or a salary-linked cover for thousands of employees, GTLI consistently demonstrates high-value protection at low cost.

FAQs on Group Term Life Insurance

Q1: Is group term life insurance mandatory in India?
 No, it isn’t mandatory under Indian labour law. However, many sectors (IT, BFSI, startups) offer it as part of standard employee benefits.

Q2: Who is covered under a group term life insurance policy?
 Typically, all full-time employees. Some companies extend cover to probationary staff. Dependents are not directly covered, though riders may support families financially (e.g., accidental riders).

Q3: Does the policy cover all causes of death?
 Yes, death due to natural causes, illness, or accidents is covered. Exclusions include suicide within the first year, participation in unlawful activities, or war/terrorism.

Q4: How much coverage does an employee get?
 It depends on the employer’s design: either a fixed sum (₹20–50 lakh) or salary-linked (3x–5x annual CTC).

Q5: Do employees need to undergo medical tests?
 No. One of the biggest advantages of GTLI is automatic enrolment without medical underwriting.

Q6: Who pays the premium?
 Usually, the employer pays. Some companies offer voluntary top-up cover at the employee’s cost.

Q7: Can employees choose their own sum assured?
 Not under the base plan — the employer decides. But some insurers allow employees to purchase voluntary top-ups.

Q8: What riders are available?
 Common riders include Accidental Death Benefit (ADB), Critical Illness cover, Permanent Disability cover, and Waiver of Premium.

Q9: What happens when an employee leaves the company?
 Coverage ends immediately. Employees can request to convert their cover into an individual term plan within 30 days, subject to insurer rules.

Q10: How are claims processed?
 The nominee submits a claim form, death certificate, and ID proofs. Insurers must settle within 30 days of receiving all documents (as per IRDAI).

Q11: Are payouts tax-free?
 Yes. Death benefits are tax-free under Section 10(10D) of the Income Tax Act. Premiums paid by employers are treated as business expenses.

Q12: What is the claim settlement ratio (CSR) and why is it important?
 CSR measures the % of claims paid by an insurer. A high CSR (95%+) means greater reliability. Always check IRDAI’s annual report before choosing an insurer.

Q13: Can employees change nominees later?
 Yes. Nominees can be updated anytime by submitting a form or via digital portals if the insurer offers one.

Q14: Is GTLI enough for employees?
 It’s a good starting point, but employees should consider personal term life insurance for higher coverage — especially if they have large loans or multiple dependents.

Q15: Can employers customise policies for different employee levels?
 Yes. Employers may offer higher multiples (e.g., 5x CTC) for senior staff and lower multiples for junior staff, or a flat cover for all.

Takeaway:
Group term life insurance is simple and flexible, but employees should know its scope and limits. Clear communication from HR about inclusions, exclusions, and continuity options is essential.

Conclusion & Next Steps

Life insurance penetration in India remains low, and for many employees, their employer’s group term life insurance (GTLI) is the only financial protection their families will ever have. At a fraction of the cost of individual term life plans, GTLI offers high-value coverage, instant enrolment, and peace of mind — making it one of the most powerful yet affordable benefits an employer can provide.

Why Employers Should Care

  • Talent retention and attraction: Employees increasingly expect meaningful benefits, not just salaries.
  • Low cost, high impact: A ₹20–50 lakh cover can be offered for less than a daily cup of tea per employee.
  • Reputation and trust: Supporting employees’ families in times of crisis strengthens loyalty and brand image.

Why Employees Value It

  • No medical tests, no waiting: Coverage from day one.
  • Family-first security: Lump-sum payouts help families cover loans, education, and living costs.
  • Tax-free payouts: Nominees receive the entire sum assured without deductions.

Next Steps for HRs and Business Owners

  1. Assess your workforce — salaries, dependents, and risk profile.
  2. Choose your coverage model — fixed vs salary-linked.
  3. Get multiple quotes from insurers and compare claim settlement ratios, riders, and digital tools.
  4. Negotiate smartly — add riders like accidental death or disability without blowing up costs.
  5. Communicate clearly with employees — make sure they understand coverage, nominee details, and claim procedures.
  6. Review annually — update cover to reflect inflation, new employees, and evolving workforce needs.

Final Word

Group term life insurance is not just a policy; it’s a promise. A promise that employers will stand by employees’ families during their hardest times. For companies, it’s one of the simplest and most cost-efficient ways to show care. For employees, it’s often the only life cover their families can depend on.

When combined with group health insurance and group personal accident insurance, GTLI completes the circle of financial security — protecting employees against illness, accidents, and the ultimate risk: loss of life.

An investment in health.  A statement of care.

Group health insurance can do more than protect your team — it can shape your culture and show what your company stands for.

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