Why Group Life Insurance is Important for a Business
Every business thrives when its employees are productive, focused, and remain a part of the organisation for a long time. A major step in ensuring this is to create the right environment and provide employees with benefits that can help them beyond the work life. A group life insurance plan is an effective way of channelling such initiatives. What is group life insurance? It is basically a life insurance policy that covers multiple people with one plan. Though it is beneficial on an individual basis as well, there are a ton of benefits that make it an important investment for any business. We explore this more in the article below.
Understanding life insurance and how group plans work
Life insurance is an indispensable part of the financial portfolio of any individual who has dependents. Having life insurance coverage ensures to a great extent that the future of the employee’s family is secured even in their absence. With the money received from the life insurance plan, their loved ones can fulfill their dreams without worrying about finances.
Employers, too, must understand this aspect and provide group life insurance coverage to their employees. In a group plan, the master policyholder decides on the coverage that the members will receive. All members are covered within a single plan, which is referred to as the master policy. The premium for the coverage is deducted automatically from the employee’s salary.
Why businesses should opt for group life insurance
- Reduces stress for the employees
Most working professionals are quite concerned about their family’s future. They work hard day and night to ensure a peaceful future for their family. This can cause a certain amount of stress, especially amongst those who are new to the fray. Providing life insurance coverage to your employees helps reduce this stress to a great extent.
- Costs are borne by employers and employees
The costs for the insurance policy are borne by the employees as well as the employer in most cases. So, the entire burden of taking care of the policy does not fall on the organisation. While half of the costs are paid for by the employer, the rest is deducted from the employer’s salary. This allows for an equal distribution of the costs and no side is pressured to take the entire expense.
- Leads to a rise in productivity
Employees perform their best when they feel valued and appreciated. What better way to show these than to insure their lives with group life insurance? When employees know that their organisation will provide for their family’s future in the event of an unfortunate situation, their dedication to the job increases. They are willing to go the extra mile and work hard to prove themselves as productive members of the organisation.
- An effective way to attract and retain talent
Before joining an organisation, many people check the various benefits they will be receiving there. A group insurance policy is an appealing benefit for many reasons and is likely to attract a larger talent pool. Similarly, employees who are already enjoying the coverage of the life insurance policy would be hesitant to leave the organisation due to this benefit.
Additionally, many companies in the market provide this benefit to their employees. So, providing group insurance coverage is also necessary to be ahead of your competitors.
- Beneficial in saving tax
The costs that the business incurs towards the group life insurance coverage come under the purview of ‘expense’ and not profit. Hence, as per Section 37 (1) of the Income Tax Act, 1961, employers can enjoy tax exemptions on their group life insurance policy.
What to keep in mind when finalising group life insurance?
It is not enough to know what group life insurance is and how it benefits businesses; one must also select the right kind of plan. Here are some tips to help in the process:
- Opt for comprehensive coverage that financially protects against a variety of diseases and manners of death
- Allow employees to pay an extra premium and select add-ons along with their base coverage
- Ensure an end-to-end digital claim settlement process so that the employee or their family do not have to go through red tape in times of crisis
- Review the insurance company and check their credentials before signing up with them.
We hope this article has increased your understanding of group life insurance and its benefits for businesses.