Under Group Life Insurance plan a large number of persons are insured at a low cost. The group consists of the employees of a single employer, members of same trade union or debtors of the same creditor. Names of all assured lives are mentioned in this policy but this policy is issued on the name of the employer, creditor or the trade union.
Only the regular and permanent employees are included under this scheme. The amount of insurance to each employee is determined under mutual understanding of the employer. There may be different amount for different classes of employees. The minimum number of insured is fixed according to the nature of business and the methods of contribution.
There are two types of plans available under this policy.
- Contributory Plan: Under this scheme the employees are also liable to pay a portion of premium.
- Non- Contributory Plan: Under this plan the employer pays the whole amount of premium and all employees are included in this plan.
Group Life Insurance scheme is a form of renewable term insurance plan. In the case of death of life assured while he is in service, the sum assured is paid to the dependents of the deceased person. A policy is issued to the employer and a certificate is given to each member included in this scheme. The sum assured can not be assigned or mortgaged.