Group term life insurance for employers (GTL / GTLI)

Why offer group term life — the promise that outlasts employment

A salary supports a family every month — until, suddenly, it can’t. Group term life is the one benefit that keeps that support going at the single hardest moment a family will face. It’s not a perk people use often; it’s the one they never forget you offered.

For the company, the mechanics are simple and the signal is large. A modest premium converts into cover worth several years of an employee’s salary for their family. It tells your team — and the people deciding whether to join you — exactly what kind of employer you are: one that has thought about their family, not just their output.

We won’t dress this up as a loyalty trick. It’s a statement of care, and people read it as one.

What a group term life policy covers

The core cover is straightforward: the full sum insured is paid to the nominee on the death of the employee, whether the cause is natural or accidental. Around that core, a few additions turn a basic policy into a proper safety net.

EDLI exemption — turning a mandatory cost into a real benefit

The law lets a company step out of the government’s EDLI scheme on one condition: you run a group term life policy that gives employees better benefits than EDLI would. With approval, your mandatory EDLI contribution stops, and that budget funds a far larger life cover instead. The compliance box still gets ticked — your people just get a real benefit for the same money.

How it works:

1. Put the better policy in place. Run a group term life policy with benefits at least equal to — ideally well above — EDLI. A salary-linked cover clears this easily.
2. Tell your team. Give employees notice that you’re moving to a group term life scheme in lieu of EDLI, and record their consent.
3. Apply for the EDLI exemption. Apply under the EDLI exemption route provided by the Code on Social Security, 2020 and the EDLI Scheme, 2026 (formerly Section 17(2A) of the EPF & MP Act, 1952) to exempt the whole company from the scheme.
4. Submit the paperwork. The group policy, a side-by-side comparison showing your benefits beat EDLI, advance premium receipts, proof of employee consent, and an employer declaration.
5. Switch over. On approval, EDLI contributions stop and any future death claim is settled by the insurer, so HR deals with one entity, not the PF office.

The 17 September 2026 change and your exemption. An exempted employer’s policy must stay more favourable than EDLI for every covered member — and the bar just moved for the lower grades. The maximum is still ₹7 lakh, but from 17 September 2026 EDLI pays that maximum to anyone averaging ₹20,000 a month or more, with no PF balance needed. If your policy pays a flat sum below ₹7 lakh to any grade, it no longer clears the test. Salary-multiple policies usually do; check the lowest-paid member, not the average. Re-test now, and again the day EPFO issues its implementation circular or revises the ₹7 lakh figure.

Under the EDLI Scheme, 2026 the exemption needs a group insurance policy from an IRDAI-approved insurer on terms better than the Scheme’s, the consent of a majority of your employees, monthly online returns, and renewal every three years.

Honest caveat: the exemption needs approval (it isn’t automatic), the policy must stay better than EDLI, and the exemption is reviewed and renewed.

This is the single most useful move most companies haven’t made — a mandatory cost quietly converted into a benefit employees actually value, often for little or no extra spend. (See the comparison tool below.)

What does it actually cost? In many cases the EDLI budget you stop paying covers most or all of a basic salary-linked policy, and richer cover or riders cost a little above that — we’ll show you the exact figures for your team.

Future Service Gratuity (FSG) — securing the years they didn’t get to work

Gratuity normally rewards the years an employee has already worked. Future Service Gratuity does the opposite: it pays the family the gratuity the employee would have earned had they worked all the way to retirement. It turns a standard end-of-service payment into a promise that covers a whole career — even one cut short.

Why it matters: when someone dies young, their family loses not just a salary but every future benefit that service would have built. Statutory gratuity, based only on years served so far, is small for a young employee. FSG closes that gap by valuing the full intended tenure. For the company it’s a modest add-on; for a grieving family it can be the difference between coping and crisis.

FSG can live in one of two places: inside the group term life policy, or as the life cover attached to a group gratuity scheme. One home, never both. Buying it twice is the commonest and most expensive mistake in this design — pick one home for it, and tell the other insurer.

It’s the advanced version of the same idea: a small, well-designed premium standing in for years of lost income.

One promise, three layers: how EDLI, group term life and future service gratuity add up

How much does your company actually pay a family when an employee dies in service? Most HR heads know the three schemes. Very few can give the one number — because the three were never designed to be added.

Most companies run three unconnected death benefits — EDLI through PF, a group term life policy and gratuity — and nobody has added them up. Stack them deliberately and every family receives one stated amount: the statutory floor, a multiple of real salary, and the gratuity a full career would have earned. HR can put that number on one page.

Why do three separate schemes exist at all?

Each answers a different question, and each leaves a hole.

EDLI is the state’s answer. Automatic with PF, funded by the employer’s 0.5%, linked to wages up to ₹25,000 — not to what the person actually earned — and capped at ₹7 lakh. The family claims it at the PF office. For a manager on ₹1 lakh a month and an executive on ₹25,000, EDLI pays the same ₹7 lakh.

Group term life is the employer’s answer. A lump sum you design — flat, or a multiple of actual salary — paid by an insurer, with a claims team behind it. Its weakness: the multiple is a judgement call, and it knows nothing about the years the person had left.

Future service gratuity is the career’s answer. Statutory gratuity pays for completed years only. The five-year rule is waived on death, but a 32-year-old with three years’ service leaves a family with three years’ gratuity — not the twenty-nine a career would have produced. FSG pays the difference: gratuity for the years never worked, at today’s wages. It can live inside the group term life policy, or as the life cover attached to a group gratuity scheme — one home, never both.

What does one family actually receive?

A made-up employee: 32 years old, three completed years, retirement at 58, monthly wages of ₹50,000 on the Code’s definition (total pay ₹1,00,000), annual CTC ₹12,00,000. The company has chosen group term life at twice annual CTC, with future service gratuity covered to 58.

Five times the money. And, if you build it the second way below, the family deals with one claims team instead of a PF office plus an insurer.

Two ways to build it

Route A — stack. Keep EDLI as it is. Add the group term life policy, and put future service gratuity inside it (or inside your group gratuity scheme’s life cover — one home, not both). No application to EPFO. The family claims EDLI at the PF office and the rest from the insurer.

Route B — replace and upgrade. Take the EDLI exemption. Your group term life policy stands in for EDLI on terms better than the Scheme’s; the 0.5% you were paying — up to ₹1,500 a year per employee at the new ceiling — goes towards the premium instead; and the family has one insurer, one nominee record and one claims team for the whole amount. Under Red Carpet, that is one named person from our side who stays with them until it is settled.

Route B carries conditions. Under the EDLI Scheme, 2026 the policy must be from an IRDAI-approved insurer and better than the Scheme for every member, a majority of employees must consent, returns are filed online every month, and the exemption runs three years before renewal. And the superiority test has a new edge since 17 September 2026: EDLI now pays the full ₹7 lakh to anyone averaging ₹20,000 a month or more, so any grade covered for less than ₹7 lakh fails it. Salary-multiple policies usually clear the bar; flat-sum policies for junior grades often don’t. Test the lowest-paid member, not the average.

The one mistake to avoid. Buying future service gratuity twice — once as the life cover inside the group gratuity scheme, again as a benefit inside the group term life. Pick one home for it, and tell the other insurer.

How does HR turn three schemes into one proposition?

• One page per employee. A Family Protection Statement: three lines and a total — EDLI, group term life, future service gratuity — the nominee on each, and the two numbers a family would call. Issued at onboarding, reissued at every salary revision. It turns three invisible benefits into one visible promise.
• One rule, not one number. State the total as a multiple of annual pay — “three years’ pay to the family”, say — so the newest joiner and the senior leader are protected by the same rule. Fairness you can show is worth more than generosity nobody can see.
• One set of nominations. EDLI, gratuity and the policy are nominated on three forms at three different times. One marriage or one estrangement later, they disagree — and a disagreement between nominations is what delays a payout. Reconcile them once a year, on the statement.
• One story in the offer letter. A line in the offer and the benefits handbook: what the family receives, from whom, and who walks them through it. Group term life is the promise that outlasts employment; this is how you say so before anyone needs it.
• One design conversation. The layers are bought from different places — EDLI from EPFO by default, group term life and FSG from a life insurer, gratuity funding from an insurer or a trust. Designing them together is broker work, and a job we do: the census, the multiple, where FSG lives, the exemption test, the statement template. Never a pre-picked insurer.

What to do next

• Pull three people from the payroll — the newest joiner, the median, the most senior — and add up what their families would receive today: EDLI, gratuity already earned, any policy. The newest joiner’s family usually comes out lowest.
• Decide the rule: the multiple of annual pay for group term life, and whether future service gratuity lives in the GTL or in the gratuity scheme.
• Decide Route A or Route B. If B, run the ₹7 lakh test on the lowest-paid grade before you apply — and diary the three-year renewal.

One more number, from EPFO’s own 71st Annual Report: 31,370 EDLI death claims were rejected out of 1,06,566 filed — 29.4%, more than one in four. A layer the family cannot collect is not a layer. Whoever files the claim is part of the design.

What shapes a group term life policy

A few honest factors shape a group term life policy, and none of them are a mystery:

• Your team’s age profile — a younger team generally means a lower rate per unit of cover.
• The sum insured basis — flat vs salary multiple, and how high.
• The riders you add — disability, critical illness and the like widen cover and shape the policy.
• Claims experience — how the policy has behaved over time.

What we won’t do is print a rate on a web page. Real pricing depends on the mix above and is confirmed by the insurer for your specific team — anything else is a guess dressed up as a quote. Tell us your headcount and rough salary band and we’ll come back with a real number.

Group term life for startups and small teams

You don’t need to be large to offer this. A proper group term life policy can be set up for a small team — commonly from around 10 lives, and sometimes fewer.

For a startup, the case is strong and the cost is small. It’s one of the cheapest ways to look — and be — a serious employer when you’re competing with bigger names for the same people. And because group cover skips the medical tests and waiting periods of individual policies, your whole team is protected from day one without any of them lifting a finger.

Setting up and running group term life

Buying the policy is the easy part. These are the five administrative steps we run with you so the cover actually works when it’s needed.

1. Secure nominee declarations. Collect nominee details in writing from every employee at onboarding. This is the single most important step for a fast, clean claim.
2. Manage the ‘actively at work’ clause. At policy start, declare anyone on sick or extended leave; their cover begins the day they return to work, keeping everything compliant.
3. Oversee Free Cover Limit underwriting. Identify anyone whose sum insured is above the Free Cover Limit and run the short medical process so they get their full intended cover.
4. Maintain an advance premium deposit. Hold a small deposit with the insurer so new joiners are covered from day one, with no gap as the team grows.
5. Champion the benefit internally. A benefit no one understands is a benefit half-wasted. We give you plain-language templates so your team knows what they have and what it’s worth.

Common myths about group term life

A few of the ones we end up correcting most often.

• Myth“Group term life is just the same as EDLI.”FactEDLI is a small, capped statutory floor; group term life is a salary-linked policy you design and control, usually for far more cover. Many companies replace EDLI with it.
• Myth“Suicide isn’t covered.”FactIndividual policies make a family wait twelve months; a group policy can often waive that, so cover applies from day one.
• Myth“You need 20+ employees.”FactA policy can commonly start from around 10 lives, sometimes fewer.
• Myth“It’s legally mandatory.”FactFor most private companies, offering group term life is a choice. EDLI (via PF) is the statutory piece; group term life is the upgrade.
• Myth“An individual policy is always better.”FactGroup cover gives day-one protection, no medical tests for most, and includes people who couldn’t easily buy their own — though it ends when employment does.
• Myth“The cheapest quote is the best deal.”FactThe insurer’s claim record and the claims support behind the policy matter more than the headline premium.
• Myth“The September 2026 ceiling change made EDLI bigger.”FactIt didn’t. The maximum is still ₹7 lakh — a fixed figure in the EDLI Scheme, 2026, not a formula output. What changed is that more families now reach it, because wages alone get there from ₹20,000 a month.

Common questions

The questions founders and HR teams ask us most — many of them about EDLI.

The right policy is a conversation, not a quote

There’s no single “best” group term life policy — there’s the right one for your team, your budget and what you’re trying to say to your people. The fastest way to find it is a short conversation, not a form full of guesses.

A note on this page. This page is general information about group term life insurance, not insurance, legal, financial or tax advice, and nothing on it is an offer of cover. The right policy for your organisation is determined through a conversation and the formal mandate process.

Sources. EDLI figures and scheme rules: the Employees’ Deposit-Linked Insurance Scheme, 2026 (G.S.R. 526(E), 29 June 2026) under the Code on Social Security, 2020; wage ceiling: notification S.O. 5109(E), 17 September 2026 (Union Cabinet approval, 16 September 2026); EPFO. Current as of 21 September 2026. EDLI exemption route: Code on Social Security, 2020 and the EDLI Scheme, 2026 (formerly Section 17(2A), EPF & MP Act, 1952). Tax treatment: Income-tax Act, 2025 (successor to Section 10(10D) of the 1961 Act). EDLI claim statistics: EPFO 71st Annual Report.