Grouping For Cover

With private life insurers offering collective cover schemes, companies have more choice

When Avinash Bishnoi joined a leading MNC, he rushed to take group insurance cover. Why? He says that it was cheaper than an individual policy, it offered better benefits, and more importantly, the documentation was taken care of by his company.

Today, with more and more people opting for group insurance, even the private players are jumping into the fray. Joining Life Insurance Corporation (LIC) are the younger entrants, HDFC Standard Life and Birla Sun Life, who are adding more zing to the drab insurance cover.

Benefits under group insurance

Group insurance has several benefits. The biggest probably is that the premia for the entire group is considerably lower than your individual policy premium.

Besides, all records are maintained with the member organisation since the premium payable by the employee is deducted from his salary. The employer benefits because the annual contribution is treated as a deductible business expense in the year of payment. For the employee, the premium paid is eligible for tax deduction under Section 88. Also, death benefits when paid are not subject to tax. But Budget 2001 has not specified whether the premium paid by the employer is included in the value of taxable perquisites.

Clearly, all of this comes with a rider or a value added benefit which is charged extra.

A look at what