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Group Term Life Insurance

Your ultimate guide

Term insurance vs life insurance

Group term life insurance is a pure insurance product and life insurance has multiple non-insurance features as well. 

A group term insurance is very simple. When the policyholder, here an employee loses their life, the insurance company gives a sum assured to the nominee. This will happen when the organization of the employee has paid the premiums regularly ever since the policy was bought and dies within the policy tenure. 

Life insurance is a bit similar. If the policyholder dies within the policy tenure and has been paying the premiums regularly, then the nominee gives the sum assured.
Life insurance generally lasts from the year you buy to the year you will be 100 years old. Now if you don’t die till 100, the insurer will give you pay you the benefits. This is not applicable in term insurance.

The non-insurance features include being able to borrow money from the insurer against the premium you paid. And the premium you pay can be used in investments and funds by the insurer. When the insurer makes a profit, a certain percentage is given to the policyholder.

Employers always go for group term life insurance when they want to cover their employees.


Term insurance

Life insurance

Tenure Fixed. Based on the plan chosen or customized as per policy buyer's requirements For life. Some insurers give it for shorter tenure like 30 years or so.
Maturity benefit No Yes
Benefits Death benefit Death benefit, maturity benefit, survival benefit, and cash value
Premium Cheaper than life insurance Higher than term insurance.

Also Read: Difference between health insurance and term insurance

Group term life insurance vs Group personal accident insurance

In both of these insurances, when the policyholder dies, the nominee gets the sum assured. The only difference lies in how the policyholder dies. In a group term life insurance, any natural death and accidents are covered. Whereas, in group personal accident insurance only death caused by accidents is covered. In addition, the medical expenses during hospitalization after an accident are also covered.


Group term life insurance

Group personal accident insurance

Policyholder Employer buys the policy for employees Employer buys the policy for employees
Coverage Death by natural causes and accidents Hospitalization expenses and death caused by accidents only
Duration Like any group policy, the tenure is one year. When an employee leaves the organization, the policy terminates for them. Like any group policy, the tenure is one year. When an employee leaves the organization, the policy terminates for them.

Group term life insurance vs Individual term insurance

The major difference between group term life insurance and individual term life insurance is the policyholder.

Group insurance is bought by employers/association heads and the like for their team which is called a group. Individual insurance is bought by an individual for oneself or their family. In both cases, the intent of the policy is to offer the sum assured to the beneficiary if the policyholder expires in during the period of the policy.

The other features like coverage and riders are subject to the policy plan and the requirements of policy buyer. However, it is necessary to know that group term life insurance is more customizable than individual term insurance. The reason behind this is that generally, group insurances cover more number of people.


Individual term insurance

Group term life insurance

Policyholder Individual gets policy for themselves Employer gets policy for employees
Benefits Death benefit Death benefit
Riders available Accidental death rider, critical illness, permanent disability, and partial disability Accidental death rider, critical illness, permanent disability, and partial disability
Premium Paid by the individual. Generally increases every year and is also based on claim dump. Paid by the employer. Premium is constant throughout the policy period.
The Return Of Premium (TROP) Possible Not possible
Duration of the policy Based on the plan chosen. Can have the policy for more than one year. Only one year. Has to be renewed every year.

Frequently asked questions

Does group term life insurance have cash value?

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No, the group term life insurance policy does not have a cash value. However, it is essential to note that the premiums paid towards a group term insurance with 0 cash value is way lesser than premiums paid towards individual term insurance policy which provides cash value.

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Group Term Life Insurance vs Life Insurance
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