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What is a Group Life Plan?
The group life plan is a Master Policy issued to cover a group of persons, under which a company can become a policyholder on behalf of its employees. Via this arrangement each employee receives a certificate as evidence of their participation in the plan.
The main purpose of a group life plan is to provide a benefit in the event of the death of an employee making funds available for last illness and burial expenses. In addition, it enables the company to provide financial assistance to the family without accessing its current income.
Key Benefits:
- Full Tax relief is granted on the premiums paid.
- Cost of coverage lower than an individual plan.
- No evidence of insurability is necessary.
- Your company is able to attract and retain high quality employees.
- You can assist employees, without accessing current income.
Who pays the cost of the Insurance cover and is it expensive?
Usually it is the company that bears the full cost of cover, which is decided by the benefits included in the plan and the composition of the group. However, full tax relief is granted on the premiums paid by the Company.
Also, because the administration costs of group coverage are less, premium rates are lower than on individual policies.
An average premium rate per $1,000 is calculated for each group when the plan commences, and is guaranteed for a 12 month period. Each plan is repriced every year on the anniversary date and premiums are based on the employee data at that time. This is because group life insurance is generally written as yearly renewable term insurance and does not allow for cash values or paid-up insurance.
How are the benefits under the plan determined?
The sum insured on each employee can either be a fixed amount for each employee, or an amount related to the employee's salary.
Are the Employees required to have a Medical Examination?
One of the many incentives of group life insurance is that no evidence of insurability is required up to the guaranteed issue limit of the plan. This means that even employees with impaired health can be covered along with those employees with good health.
Are there any additional benefits besides Life Insurance?
There is also Accidental Death and Dismemberment Cover. Within 90 days of death by accidental means this cover pays an amount equal to the Basic Group Life Sum assured together with the Group Life sum assured. If an employee is assured for $20,000, the amount payable would be $40,000.
Additionally, the Accidental Death and Dismemberment cover also applies to cases of loss of limb, loss of sight, hearing and loss of use of limbs. The amounts payable vary according to the circumstances and medical condition.
At Guardian Life, we also offer Voluntary or Optional Group Life as well as Spouse and Dependant's Group Life. Voluntary Cover offers the employee the option to choose additional cover on his own life, for which he will be required to pay the additional cost. The employee can also choose to extend coverage to his or her spouse and dependant children up to a pre-determined fixed amount.
What is the Living Assurance Benefit?
Like Accidental Death and Dismemberment, this is offered as a Rider to the Basic Group Life benefit. In the event that a member suffers from one of a number of specified critical illnesses, the plan pays a portion of the Basic Life sum assured as a tax free lump sum.
This enables the person to obtain the required medical care. On death, the balance of the Basic Group Life benefit is payable.
What happens to a member's cover if he leaves the group?
They cover is granted on a yearly renewable term basis. As such, no cash value or paid up cover is provided and cover terminates if a member no longer belongs to the group of persons eligible for cover.
If prior to age 60, and while insured under the Plan, a member becomes totally disabled such that he is unable to work or engage in any occupation for compensation or profit, his Life coverage will be extended without payment of premium for a period of one year.
Such insurance will be extended for successive one year terms but not beyond the first day of the month coinciding with or next following the attainment of age 65.
Benefits of Group Life Assurance
- Allows the employer to provide financial assistance to the family of the deceased without accessing its current income.
- Full Tax relief is granted on the premiums paid by the employee.
- The costs of coverage are significantly lower on a group than an individual.
- The sum ensured on each employee is variable and can be fixed or relative to their salary.
- By recognising and the needs of your workforce and purchasing Group Life Assurance, your company is able to attract and retain high quality employees interested in the benefits of long term employment.
- Accidental and Dismemberment Cover is also offered under the Group Life Assurance Plan.
- Under this plan employees are also able to purchase additional cover for themselves and their families at their own expense.
- No evidence of insurability is necessary to effect Group Life Assurance.
