Definition
Group Term Life
Group term life is a single life insurance policy providing term cover to a group of people, commonly employees, with the employer as master policyholder.
Under a group term scheme, each covered member gets a sum assured, often a multiple of salary, with no individual medical underwriting up to a 'free cover limit'. The employer typically pays the premium, and cover ceases when the member leaves the group.
Because risk is pooled and acquisition costs are minimal, group term life is much cheaper per unit of cover than retail term plans. It is a staple employee benefit in India but, like all corporate cover, it ends on exit, so employees are advised to hold personal term cover as well.
Related terms
- Corporate CoverCorporate cover refers to group insurance benefits an employer arranges for staff, spanning group health, group term life and group personal accident.
- Group Personal AccidentGroup personal accident cover provides accidental death and disability benefits to a group of people, typically employees, under one policy.
- Term InsuranceTerm insurance is pure life cover that pays your family a large sum if you die during the policy term, in exchange for a low premium.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.