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Why must business owners purchase a group insurance and how it works?

Companies and business understand today that their greatest strength is their people. Their products and services may get them their profits, but it is their employees that make the magic happen. If a business invests in their workforce and does its best to keep them healthy and happy then the business prospers. A resource pool of demotivated employees will eventually hurt the business adversely. There are multiple ways of ensuring that the workforce feels that their management cares for their well-being. Group insurance for employees is one of them. For employees, health insurance is the same as wealth insurance as it is a protective medical cover for them. They may use it for medical emergencies pertaining to them or their family. This investment in the employees will give a much higher return on investment to the employers.

Group Insurance – what is it? 

There are essentially two kinds of insurance provided by insurance companies – individual and group. Under the former, a person buys a policy and pays premiums on it. Individual insurance policies are in no way related to the person’s employers. On the other hand, group insurance is bought by an employer for all of the employees as an insurance cover. The premium on this policy is paid by the employer and not the employees. Yet, the claims on this policy are made by the employees. Basically, under group insurance employees enjoy medical insurance for free. What is covered? Death is covered under group insurance. A predetermined amount is made available to the nominee of the employee. This is when such employee dies while he/she is a salaried employee of the company. 

Another aspect of coverage is cashless hospitalization. Hospitalization costs are covered by the employer for the employee or the employee’s family’s hospitalization. Disability is also covered. If an employee is disabled due to an accident and is declared not fit for work then he/ she is paid a predetermined amount. This is paid in order to make it easier on the disabled employee and their family in their time of distress. Travel mishaps are covered as well under group insurance. This is prevalent when employees work overseas on a project. Group insurance will cover such employees against aircraft hijacking, baggage loss etc. 

What works better – individual or group insurance? 

Group insurance often tends to be better in the longer than individual insurance. One of the most reasons for the same is that they are low on premiums. Employers buy group insurance in the form of a bulk acquisition. Hence, insurance companies offer discounts to companies on the premium amount. The premium cost per employee tends to be much lower than that of individual premium amounts. In addition to the low premium amount, often group insurance also has a much wider coverage. This means that your extended family such as in-laws and grandparents are also included. Also, sub-limits, as well as waiting periods, tend to be on the lower end. Even maternity leaves are a part of group insurance policies. These are often not covered by individual insurance schemes. Additionally, the paperwork and procedural steps with group insurance do not take too much of an effort. This is as the employee does not have to apply individually for the policy. Neither does the employee have to go in for a medical check-up. The moment an employee joins a company, he/ she becomes part of the group insurance policy that has been bought by such company. Processing is also much faster with claims when you are part of a group policy. The HR team ensures that there is no lag in claim-processing for the employees. Another incredibly important point is that of tax-savings! According to the Income Tax Act, a business will be allowed to claim deductions in tax on the group insurance premiums under section 37(1). The insurance costs for the company automatically comes down. In summary, It is a very smart move by the employer to invest in group insurance for their employees. This ensures that your resources stick with you as they feel valued. In addition to the employees feeling valued, there are multiple monetary benefits of buying group insurance policies.

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