Group insurance is one such social security measure taken by organizations to safeguard the future of their employees. It is a type of insurance policy where the insured party is not an individual but a group of people like employees of the same organization, society members, labor unions, professionals of a single body, etc.
Organizations, large or small are increasingly getting sensitive to their social obligations towards their employees. They are realizing that their duty extends beyond giving salaries on time. The large pool of funds and the strong base of managerial expertise makes it possible for them to do something more for the economic and social security of their people.
Group insurance is one such social security measure taken by organizations to safeguard the future of their employees. It is a type of insurance policy where the insured party is not an individual but a group of people like employees of the same organization, society members, labor unions, professionals of a single body, etc. The policy is normally taken by the employer or the head of the society for the benefit of its members. The policy generally covers accidents, health, disabilities, retirement liabilities, and death.
The policy is equally beneficial for the employer because it enables him to successfully manage gratuity and pension liabilities on time while keeping the investments of the company intact. Taking such policies at the earliest avoid cash flow problems, disruption in growth plans, and retain the company's image.
Group insurance is cheaper compared to individual insurance. The presence of a large number of contributors reduces the cost per contributor to the minimum. In other words, the premium amount spreads across all the members. In many cases, the entire cost of the policy is borne by the employer. In other cases, there is a deduction from the salary of the employee. The deduction is proportionate to the size of the salary and reflects in the salary structure.
Group insurance plays a pivotal role in influencing the psychology of an employee. It makes him feel a part of the organization, which in turn, motivates him to perform better. It even reduces employee attrition rate and unrest in labor unions. Special policies where the employees' families are also covered for the benefits make them content and faithful to their employer.
In India, almost all insurance companies provide group insurance policies that have a number of takers. All policies have diverse features and benefits suiting different security requirements. Even the premium amount is a competitive rate to minimize the insurance cost. One can refer to the websites of insurance companies to know about their policies in detail. One can also avail the services of an insurance broker to take the right policy.
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