Group Term Life Insurance is a Business Insurance policy that offers Life Insurance coverage to a group of employees under a single policy. This policy can be purchased by a company, bank, NGO, professional group, NBFC, or a microfinance institution. The premiums and maintenance of this policy is borne by the employer/institution for benefits provided to its workforce.
A Group Term Life Insurance policy, along with Group Health Insurance and Group Personal Accident Insurance, constitutes an organisation’s Employee Benefits programme. Most companies offer their employees basic coverage under these policies and provide them with the flexibility to purchase supplemental coverage for themselves or their dependents by paying extra premium.
With the help of this policy, employees can safeguard the financial stability of their spouse, children or dependent parents in the event of their death. Group Term Life Insurance offers blanket coverage, which means new employees are immediately covered on entering the company’s workforce. Here, the contract of insurance is managed by a single group administrator who sets the amount of Sum Insured and ensures regular payment of premiums.
Just like other Group Insurance policies, this policy also offers tax benefits to both the business in the form of tax rebates as well as to employees who make contributions towards the premium. Furthermore, the death benefit received under this plan is exempt as per section 10(10D) of the Income Tax Act.

Group Term Life Insurance, as the name suggests, provides Term Life Insurance to an employee who meets the eligibility and insurability requirements of the policy, such as being a permanent employee of the organisation, being above a certain age limit, or upon the occurrence of a qualifying life event. In the event of the employee’s death during the policy period, a death benefit equivalent to the employee’s salary is provided to his/her dependents.
Group Term Insurance plans come in various forms depending on the particular needs of the insured business -
- Some plans offer uniform coverage to all employees
- Some plans offer graded or ranked coverage with special benefits based on an employee’s position in the company
- Some policies also provide coverage for outstanding loans to a group of borrowers, such as housing loans, car loans, etc.
- Some plans offer add-ons or riders which provide critical illness benefits, accident benefits, disability benefits, etc. These can be availed at an additional premium
In addition to the basic death benefit, this policy can also provide a Double Accident Benefit, which entails a double payment of the Sum Insured if the employee dies of an accident during the policy period. Other causes of unexpected death, such as suicide, lifestyle ailments, and homicide can also be covered under this insurance.
Most Group Term plans do not require an initial health check-up and automatically cover an employee right from the moment they opt-in. However, under some policies, employees can undergo yearly health check-ups free of cost.
Some plans also equip employees with Gratuity Benefits, that are awarded to them after completing a certain number of years in service to the company. Generally, this limit is set at 5 years but can also be 1 year.


Group Term Life Insurance comes with much of the same exclusions as regular Life Insurance policies. An employee is not covered under this policy in the following cases -
- The employee leaves the organisation
- The insured employee survives the policy period
- Death due to war or war-like activities
- Death due to pre-existing diseases or STDs
- Death caused during childbirth, pregnancy, or other related complications
- Death caused by drug and alcohol abuse
Group Term Insurance policies are generally inexpensive as they cover a large number of members under a single plan making the premiums much cheaper than individual Life Insurance schemes. This insurance also helps businesses build up funds to meet their future gratuity liability towards employees. These features coupled with its role in boosting employee retention and motivation make Group Term Life Insurance a requisite addition to a business’s insurance roster.
Read more: Employee Benefits Insurance policies for Small Businesses