Group (Term) Insurance Scheme provides life insurance protection to groups of people. Administration of the scheme is on group basis and cost is very low. Under Group (Term) Insurance Scheme, life insurance cover is allowed to all the members of a group subject to some simple insurability conditions without insisting upon any medical evidence.
The restrictions under a Group Term Insurance Scheme mainly relate to size of the group, amount of cover allowable, minimum and maximum age limit for eligibility of cover (18 & 60), participation of minimum percentage (75%) of eligible members of the group at inception and compulsory participation of all new members.
A single Master Policy is issued covering all the members of the scheme. The scheme is administered by the Employers, Associations, Societies etc. called Nodal agencies.
The premium may be wholly paid by the employer or the Nodal Agency. However, the scheme may be contributory i.e. the members may also contribute.
All Group Insurance schemes are subject to basic review of Rating, i.e. the Table of One Year Renewable Group term assurance plan (OYRGTA) Premium Rates is reviewed from time to time depending on actual experience.
For Group Insurance Scheme in lieu of Employees Deposit Linked Insurance (EDLIS) the insurability condition is that should be a member of the Provident Fund Scheme of the employer. For other Group Insurance Schemes of employer-employee groups the insurability condition is that the member should not be absent on ground of sickness on the entry date. For all non-employer-employee Group Schemes the basic insurability condition is that the member should be in good health on the date of entry.
Installation of Scheme:
In respect of Group Insurance Schemes the steps to be taken for introduction of the scheme are to frame rules of the scheme in consultation with LIC, to forward to LIC the employees' data and Master Proposal forms together with a copy of the rules and to pay the premium as required by LIC.
Admistration of Scheme:
At the commencement and thereafter on each Annual Renewal Date, the Group Policyholder will have to send all the member's data (and particulars of the new entrants from time to time) to the P & GS unit of LIC. Detailed OYRGTA premium calculation will be made on each Annual Renewal Date.
The premiums paid by the employer are allowed as business expenses and the amounts are not treated as perquisites in the hands of the employees. The premiums paid by the members are eligible for income-tax rebate under Section 88. The benefits paid under the scheme are tax-free.
Double Accident Benefit:
Double Accident Benefit, i.e. payment of double the sum assured on death due to accident (without permanent disability benefit), may be allowed under Group Insurance Schemes for an extra premium Rs. 0.75 per Thousand Sum Assured per annum. Double accident cover under all Group Schemes taken together should not exceed Rs. 4.5 lakhs.