In order to attract and retain employees, organizations offer many benefits to their employees and these benefits are collectively known as employee benefits. One such benefit offered is “term life insurance”. A Group Term Life cover supplements the sum assured taken by an employee and provides financial relief to the family in case of the employee’s untimely death.
Some of the features of the Group Term Life cover:
• One master policy issued covering all members of the group
• One-year renewable plan
• Minimum 10 Employees to consider it as group
• Sum assured is payable on death (either due to natural causes or accidents)
• Addition and deletion of group members on a pro-rata basis
• No health tests required for group members up to a defined sum assured limit which is called ‘Free Cover Limit’. Health tests applicable to members who have sum assured above the Free Cover Limit
Usually, when the employee leaves the organization, this cover terminates. However, there are few case scenarios when it may not terminate but will be impacted:
In case you Convert it to a permanent individual policy:
n this case, the employee converts it from a group term to a permanent individual policy when he/she leaves the employment. This conversion is quite expensive if ones wait because with age the premium increases.
You can port the policy:
Some of the term life insurance plans have the portability option available, which means that when an employee leaves the job, he/she can continue the coverage at his/her cost. However, the option of porting the coverage will probably have a similar rate the employee had while working. However, rates can still increase.
There is one more scenario just for the FYI: In case an employee retires, some plans allow the retirees to continue the policy at the retiree’s cost.
You should speak to your HR representatives about the available option in detail. Since you don’t control the term life plan, it can change any time that’s why it is imperative to opt for a personal life insurance policy and secure and safeguard yourself rather than totally relying on the Group term plan.
Susheel has been associated with insurance providers and intermediaries for about a decade or so. Worked as sales professional looking into direct B2B marketing, channel marketing, institutional and government contracts. He is also a certiﬁed Happiness Coach, Berkeley method of wellbeing California and wants to help companies have a better and happy workforce, his motivator to create Ethika.