Group insurance balances the loss to some extent to the employee and his family and gives the employee a sense of security CONGLOMERATES and organisations today witness a lot of change in management, and are worried about high attrition rates. Non-monetary benefits have become a way of life with modern companies. Employers are looking for different ways to stop attrition, and reward and retain key members through such benefits. Employers also look for alternatives to retain and motivate employees, and life insurance continues to be the most popular choice.
Group insurance balances the loss to some extent to the employee and his family and gives the employee a sense of security. It can improve employee morale and productivity. Group life plans offer companies the unique opportunity for provid ing adequate relief at a very low cost to the family of an employ ee in the event of his/her pre mature demise.
Group insurance not only pro vides the much-needed life cover but also additional benefits such as accidental death benefits and accidental disability benefit apart from gratuity and superannuation schemes, which are more statutory in nature.
But then, why should one go for group insurance?
Group insurance benefits both employees and the employer. To the employer ¦ Provides valuable Life Cover for the employee at an attrac tive benefit-to-premium ratio. ¦ Contribution to the Group Term Life Scheme by the Em ployee is allowed as business expenses. ¦ Improves staff relation and goodwill. ¦ Helps in recruitment and re tention of quality staff. ¦ Helps raise employee motiva tion levels and productivity. ¦ Easy to set up and administer.
Gratuity being a statutory lia bility of an employer, gratuity scheme is one of the most saleable products in the mar ket. Tax concessions under Sec 36 (1) (v) have made this prod uct more attractive. ¦ Similarly, although super annu ation is not a statutory liability but special tax concessions un der sec 36(i)(iv) have attracted many corporates to offer this scheme for employees.
Another important product, group term life in lieu of ‘EDLI’1976, has become attrac tive on the special features of higher benefit at lower cost. To the employee ¦ In the event of untimely death of any employee, the Life Cov er amount is paid. ¦ Death benefit, when paid, will be exempted from Income-Tax at the hands of beneficiar ies/employees. ¦ If the scheme is contributory i.e. employees also contribute the premium, they are eligible to claim Income Tax rebate under Section 88. ¦ The cover is available up to a Free Cover Limit without in sisting upon any medical evi dences, subject to some simple insurability conditions.
Apart from term plans, insurance companies offer gratuity and superannuation products to companies to meet statutory requirements. Also, insurance players offer the Unit-linked platform, which gives really good returns with moderate equity exposure to maximise gratuity compensation of employees.
Most companies have a large gratuity corpus. Bajaj Allianz Life offers setting up of special funds with fund choices depending on asset mix and interaction with fund managers to help better plan returns and maximise the benefits to employees of the company. It also provides added features like life cover, accident riders like in case of death and disability.
Insurance companies provide an exciting range of group products which enable organisations to provide protection and care to their members/employees:
Group credit cover—Available for employer-employee groups and non employer-employee groups: This scheme insures the loan amount outstand ing in the account in case of premature death or disability.
Group term life cover —Available for employer-employee groups and non employeremployee groups: This scheme covers the members of an organisation against the risk of death or disability.
Group term life cover in lieu of EDLI—Employees Deposit Linked Insurance Scheme: This scheme is a better alternative to the Employees Deposit Linked Insurance Scheme, 1976, under Sec 17(2) of the Employees Provident Fund and Miscellaneous Provisions Act.
Company’s group gratuity liability cover: This scheme provides for systematic funding to meet your gratuity liabilities.
Group superannuation cover: A defined contribution scheme that provides for a retirement fund, which ensures financial stability, security and independence in the post-retirement years of each member.
(Manjit Singh Sidhu is Head, Group Insurance of Bajaj Allianz Life Insurance)