Use cost-effective and accessible group term plan to boost coverage

 Use cost-effective and accessible group term plan to boost coverage

Bajaj Allianz Insurance Company has recently launched a group term cover for customers of the post office and India Post Payments Bank. This cover is available in two variants, priced at 2,584 and 5,168 (inclusive of GST), for a sum assured of 5 lakh and 10 lakh, respectively.

How does it work?

Group term insurance is offored an affinity group-employees of a company, customers of a bank, members of a club or an association, etc.”One condition is that the group should not have been formed specifically for the purpose of obtaining insurance.

The sum insured and risk profile (the latter depending on, say, occupation) determine the premiums of these policies. A larger-sized group is likely to be charged a lower premium person. Pricing also depends on whether the cover is compulsory or optional for group members. The cost is usually lower in the former. “The premium can vary between 150 and 500 per 1 lakh of sum assured.

No individual and writing

Individuals members benefits from being part of group.” The group term cover we have launched for members of the post office and India Post Payments Bank offers age independent pricing: all buyers pay the same premium irrespective of age.

Individuals don’t have to undergo medical underwriting.” This means everyone gets covered automatically. These plans are a boon for people with pre-existing disease who are finding it difficult to obtain an individual’s cover.

The paperwork is simpler. “When you go to purchase an individual’s cover, you will typically be asked for your salary slip, three-four years of income tax returns, etc. None of those financial documents have to be submitted here. Group term cover is also far more cost-effective than an individual’s cover.

Inadequate cover

A group term cover is renewable every year.” If a company gets into financial trouble, it may decide not a renew the cover. The premium can change year on year based on claims experience. “In an individual’s cover, the premium remains fixed throughout policy tenure.

Group policies tend to have limited tenures.”The cover from your employer terminates at retirement. Most other group covers also don’t extend beyond 65. The sum insured is often inadequate.” The sum insured depends on the group’s decision and doesn’t usually exceed 5-15 lakh.

Most high-income customers nowadays require a sum insured of Rs 1 crore and above. Group policies also can’t be customized using riders. Finally, a member less this cover on existing the affinity group.

Who should opt for it?

Many 20-3 year olds are reluctant to buy a pure protection plan.”They can buy a group plan which will offer them a cover of Rs 5-10 lakh. Once their responsibilities increase and their affordability improves, they can buy an individual’s cover.

Mehta is of the view that anyone who is offered a group term cover should opt for it. “The premium is low, no medical test is required, and on-boarding is simple. Kashiwa says a group cover should be avoided only if it is expensive.

Supplement with individual cover

If you have the option to be part of two group cover, go for the less expensive one.”Compare the premium as a percentage of sum insured of each of the offerings.

A group cover must be supplement with an individual cover. Growing lifespans are forcing people to work after retirement, with their families still dependent on their earnings.”Such people will need an individual cover that can provide protection till the age of 75or 85.

Many people may quit large organization and move to a start-up, which may not offer a group term cover. They too, will feel the need for an individual cover. Buy the individual cover early as the premium is lower at a younger age.

YOU NEED BOTH TYPES OF COVERS

	Individuals	Group
Premium	Premium is determined based on age, health condition, and other factors of the individual	Premium is calculated based on the average risk profile of the group
Underwriting	Understanding is done for each individual policyholder.	Underwriting is done for the entire group
Sum Assured	Higher sum assured can generally be availed of	Sum assured tends to be lower.
Renewability	Generally renewable up to certain age	Renewability depends on desire of the entity administering the group policy
Portability	Can be transferred to a different insurers	Cannot be transferred as it is provided by the employer or a group
Customization	Can be customized based on the specific needs of the individual	Limited customization possible as the policy is designed for the entire group

  

For More Details: Pooja Manoj Gupta, visit www.giia26.com
Email: pmgiia26.com Mobile 8882286639