Understanding Group Insurance Scheme: Usage and Benefits

Understanding Group Insurance Scheme: Usage and Benefits

Nowadays, many organizations and businesses 🏒 offer their employees various insurance schemes as a job perk or overall compensationπŸ’°. More often than not, these are group insurance schemes, where a target group of people comes under the ambit of the scheme rather than individually having to provide insurance πŸ§‘πŸΌβ€πŸ€β€πŸ§‘πŸ». In this article, we will take a look at what these group insurance schemes mean, types of group insurance, what their benefits are, and how one can claim them.

Group insurance provides the same level of coverage to all the members of the group, irrespective of gender, age, or socio-economic status. The selected group may also be co-operative societies, club members, professional associations, etc. When an employer purchases group insurance for their employees, it is considered to be a formal group. On the other hand, when a group administrator purchases the insurance on behalf of a society or club members, the group is considered informal.

Let’s take a look at some key features πŸ”‘ of such a scheme.

  1. Group insurance provides the same level of coverage to all members of the group, irrespective of size.
  2. Since the group policies ordinarily cover many people, the risk is more spread out, allowing for standardized coverage at reduced rates. 
  3. The manager of the group gets a master policy in the name of the group.
  4. Coverage under these schemes extends until the individual remains part of the group. Coverage ceases upon exiting the group.

These are some basic features of a general group insurance scheme. However, depending on the category of group insurance availed, there are specific features. There are four 4️⃣ categories of group insurance plans, all with their own features and benefits. These four categories are listed below.

  • Group life insurance πŸ§—
  • Group health insurance πŸ‘¨β€βš•οΈ
  • Group personal accident insurance πŸ€’
  • Group travel insurance πŸ§‘β€βœˆοΈ

As can be gleaned, these policies are availed for specific purposes, and their benefits reflect the same. Each group insurance also has a different set of documentation πŸ“„  for when the insurance is to be claimed.

Benefits of Group Insurance Schemes

There are various benefits associated with group insurance schemes, depending on the type to which a group has subscribed. Let’s take a look at the advantages from two perspectives – of the organization 🏭  and of the group members πŸΌβ€πŸ€β€πŸ§‘πŸ»Β Β  .

Benefits to the organization:

  • Tax benefits – The premium paid towards a group insurance scheme can be claimed by the policyholder when filing for income tax returns 🧾.
  • Cost-saving – Apart from a sizable tax break, organizations also save significantly on group insurance rather than having to provide individual insurance to their employees. It is much more economical πŸ’² for a company to provide group insurance since the premium for group insurance is also much lower than that of individual insurance.
  • Employee morale  – Providing insurance as part of employment allows the employee to work stress-free and creates a sense of loyalty towards the company. Coverage under an insurance scheme creates a positive environment ☺️ for the employees and contributes towards increasing employee morale and belongingness to the company.
  • Customization of policies – Although group insurance provides the same level of coverage across the group, the employer has the flexibility of determining the best-suited policy πŸ‘ for a particular group of employees. For example, the policy can vary depending on the employee’s designation or salary.

Benefits to the group members:

  • Affordability – Since premiums are mostly paid πŸ’Έ by the employer, those employees who cannot afford individual insurance premiums are also included under the protection. Group members can also claim tax returns on the premiums paid towards the group scheme.
  • Simplified entry into policy – These policies ordinarily do not require specific conditions to be fulfilled before obtaining the policy, which is often the case with individual insurance policies.
  • Flexibility – Many group schemes come with the flexibility of converting the policy to an individual one πŸ‘©. This is useful for those members who are leaving the group, as they can retain coverage even after exiting upon paying a conversion fee.
  • Extendable to family – These policies are usually extendable to immediate family members πŸ‘ͺ, even if they are not part of the group insured. This also provides an additional sense of security to the employees.

Eligibility for Group Insurance

Although there are no strict prerequisites, group policies do have certain conditions that ought to be fulfilled in order to be eligible for group insurance. Let’s take a look at some of these.

  • Age – A group member must be a minimum of 18 years of age πŸ”ž to qualify. The maximum age may vary depending upon the nature of the policy. The most common is 60 years of age, but some policies also allow entry up to the age of 80 years as well.
  • Group size – The minimum number of group members vary depending on the policy availed and may be anywhere between 7 and 50 members πŸ«‚. However, the numbers may be flexible.
  • Activity – It is important that all the members of the group are active and full-time πŸ•΄οΈ members.

Claiming Group Insurance Policy

The process of filing a claim has been simplified. Depending on the kind of group policy, that is, whether it is life insurance, health insurance πŸ₯ , personal accident insurance πŸ€• or travel insurance 🧳, one simply has to submit the required documentation along with a claim form to the insurance provider. For example, you would require documents such as the duly filed group insurance claim form, medical reports, hospital bills, payment of receipts, etc., in a health insurance claim. On the other hand, for travel insurance ✈️ claim, you would require a copy of the passport, boarding pass, and baggage slips πŸ›… of the passenger, in addition to the insurance claim form. The documents for personal accident and life insurance would also vary accordingly.


Plum Insurance offers Group insurance schemes are useful both to the employer and employee. Not only does it allow for a significant cost break to the employer, but it also includes all employees of a certain group to receive protection under the scheme, regardless of variables such as socio-economic status or age πŸ‘΄πŸ». It is convenient and beneficial βœ…, and more and more businesses have started providing these schemes to their employees.