Group Insurance: Types of Group Insurance Plans in India

Group insurance covers the insurance needs of a group of people who belong to the same profession, organisation or business.

The coverage benefit under the plan is provided based on the policy’s guidelines. The benefits of the group insurance apply to all the members of the group.

Under the group insurance plan, there are two types of groups that are covered under the plans.

-Formal Group: The formal group is where the company's employer purchases the plan to insure its employees.

-Informal Group: These are basically welfare associations, cultural groups and social groups, in which, the head of the association or group administrator purchases an insurance plan for their members.

There is a wide array of group insurance plans available, such as group mediclaim policy. However, all group insurance plans are classified into two main categories, which are listed below:

-Contributory: Under this type of group insurance plan, an employee or member must pay either a partial or full premium to receive the plan's benefits. For example, the employer's deducts part of the employee's salary to pay the premium of group health insurance

-Non-contributory: Under this type of group insurance, the employer or head of the association pays the premium fully. Members or employees can avail themselves of the benefits without paying the premium.

There are various types of group insurance in India available. Some of them are listed below:

-Group Health Insurance

A group health insurance or group mediclaim policy offers health or medical coverage to a group of people. The plan is usually purchased by the employer. Under the plan, medical expenses of employees up to the specified sum insured are covered.

Furthermore, the group health insurance plan allows employees to add their dependent family members, such as parents, children and spouses. Employees do not have to go through medical check-ups to acquire group health insurance.

-Group Employee Deposit Linked Insurance

Another type of group insurance is Group Employee Deposit Linked Insurance, which is a part of the Employee Provident Fund scheme. The benefit of the employee is based on its contribution towards the provident fund under this plan. Currently, the Employee Provident Fund Organisation pays up to ₹7 lakh in case of permanent disability or death.

Employees can transfer the benefits of this plan to their next job at the time of switching jobs. Furthermore, the benefits of the plan are universally applicable irrespective of working hours or place of accident.

-Public Liability Insurance

This is another type of group insurance purchased by organisations dealing with employees, agents, clients, etc. The plan usually covers third-party liabilities, injury or property damage due to unfortunate events by the insured’ property or person.

For example, a client visiting your office slips due to a wet floor and gets a knee injury, which will lead to hospitalisation expenses being covered under this plan. This plan also covers the legal liabilities. The plan also offers coverage to tenants or contractual liability.

-Employee Compensation Insurance

Employers offer workers' compensation insurance to their workers. This plan is mandatory by law and comes under the Employee Compensation Act. Under the act, employers are required to cover expenses incurred due to accidents or injuries caused to employees during employment tenure. The purpose of the plan is to offer financial support to workers and their families in case of accidental death or disability during employment.

-Group Pension Insurance

Another type of group insurance plan is group pension insurance, which covers employee retirement needs. The plan is an alternative to the Employee Provident Fund or National Pension System. Its purpose is to provide financial security to employees after retirement. Employees have the flexibility to transfer the benefits when leaving the organisation.

-Group Personal Accident Insurance

Group Personal Accident Insurance is a type of coverage typically offered by employers to their employees as part of a benefits package. This insurance provides financial protection in the event of accidental injury, disability or death. It helps cover medical expenses, hospitalisation costs and, in some cases, the cost of rehabilitation.

In the event of permanent or temporary disability resulting from an accident, the policy may provide disability benefits. Additionally, if an employee dies due to an accident, the insurance offers death benefits, usually paid as a lump sum to the employee's beneficiaries.

-Group Travel Insurance

Another type of group insurance is group travel insurance, which is a mix of health, liability and accident insurance. The plan usually covers the group of travellers against medical emergencies, loss of luggage, third-party liabilities, accidents, etc. during the trip. Organisations also prefer this plan to offer security to their employees who travel a lot on business trips.

-Group Term Life Insurance

Group Term Life Insurance is a type of life insurance typically provided by employers to their employees as part of a benefits package. This policy offers financial protection in the event of an employee's death, with the death benefit usually paid as a lump sum to the employee's nominated beneficiaries. The coverage amount is decided based on the employee’s salary.

Let us understand the differences between group insurance and individual insurance based on various parameters in detail.

• When it comes to choosing group insurance, the employer or organisation must consider certain pointers to choose the right insurance plan.

• While choosing any group insurance coverage, assess your business requirements, industry risk, employee demographics and more. This will help you choose the right coverage that aligns with your organisation's goals.

• While purchasing a plan, it is best to compare plans with different providers to learn about coverage and premiums. Then, choose the plan that best meets your requirements.

• Another point to keep in mind when choosing group insurance is that the plan should be flexible. This means policyholders should be able to customise their coverage as the business grows.

• It is best to ensure in advance what your group insurance plans cover and what it does not cover to avoid any confusion.

A business or organisation faces various risks and challenges. Any unfortunate incident can cause substantial loss to the business. Hence, businesses need to consider investing in SME insurance plans available, such as group health insurance, group travel insurance and more. Knowing all about the type of group insurance plan is crucial for businesses to make informed decisions.

TATA AIG offers group health insurance plans that are customised to meet the needs of your organisation. Under our group health insurance, standardised medical coverage is offered to all members of the group.

Furthermore, employees do not have to go through a medical test to get insurance coverage. We offer coverage for pre-existing conditions from day one. Secure your employees now with our group mediclaim policy.

Are there any tax benefits of group health insurance for employers?

Yes, in India, there are tax benefits associated with group health insurance. For employers, the premiums paid for group health insurance policies are considered a deductible business expense under Section 37 of the Income Tax Act.

Can you name general insurance categories?

General insurance in India covers a wide range of categories, including health insurance, motor insurance, home insurance, travel insurance, and business insurance.

How many members are needed for group medical insurance?

As per the IRDAI, employers need to have at least 20 employees in an organisation to purchase a group health insurance plan.