Is Life Insurance Through Work Enough

• Premiums as low as Rs.17/day for sum assured of Rs.1 crore*
• Claim up to Rs. 1,50,000 deduction under section 80C**
• Choose between annual and monthly premium payment options

While it is common for corporate employers to provide health insurance policies to their employees, a few employers provide life insurance plans too. Certain organisations or groups provide a life insurance cover to their members. Insurance companies, like Aviva Life Insurance, offer group life insurance plans for the benefit of such employers or heads of groups. The plans come with additional add-ons such as accidental death benefit cover or permanent disability cover that will enhance the base policy. Such policies, in most, cases will have a single large sum insured from which benefits are paid.

Apart from corporate employers, certain factory owners are expected to provide life insurance under the Employees’ State Insurance Scheme (ESIC). Individuals who receive monthly wages below Rs.21,000 can avail coverage under ESIC. Also, the government, too, offers life insurance plans to its employees such as the Postal Life Insurance scheme.

Employers, heads of organisations, or the government may offer life insurance plans but it is best to purchase another separate life insurance policy to ensure complete coverage of one’s risk. Here’s why you should buy a separate life insurance plan along with your work life insurance plan:

• Coverage on termination/resignation: If a member of the organisation quits or is terminated, the coverage will cease and he/she will no longer have life insurance coverage. In such a scenario, if the unfortunate were to happen, the individual’s family will be left with no financial aid and may have to go through a lot of hardship.
• Coverage on termination of the plan by the master policyholder: If, due to certain circumstances, the master policyholder terminates the plan, the member of the policy will have no risk coverage. With no life insurance, his/her family will have to sacrifice many expenditures in order to go on with life.
• Control over individual’s coverage: Typically in a group insurance policy, the master policyholder has complete control over the policy and he/she chooses the features, add-ons, and other such specifications. The members have no control whatsoever. This is a reason why the individual should go for an additional separate life insurance plan where he/she can decide how much additional coverage is required, what add-ons need to be attached, what policy term should be chosen, what premium payment term should be opted for, etc.
• Flexible sum insured amount: Generally, each individual will have a sum insured cap beyond which claims cannot be made. Hence, all members with varying number of dependents will have the same sum insured amount available. This is not practical as different individuals have different levels of responsibilities and financial commitments.
• Repayment of debts: Group life insurance policies usually have a low sum insured and it may not be enough to repay the debts owed by the deceased person. After the death of the borrower, his/her spouse or children will be liable to pay back the loan. This might prove to be a burden in case the dependent does not have enough funds and the life insurance plan provided by the employer does not suffice in this situation.
• Helps achieve long-term goals: Group insurance policies provide death benefits and occasionally personal accident or physical disability benefit covers. Separate health insurance plans, on the other hand, come in various types and help achieve a person’s long-term goals. A few life insurers offer child plans and retirement plans that are specific to a person’s goals and help achieve them. ULIPs are unit linked and offer income in the form of regular instalments.
• Costs less when the person is young: As one gets older, the premium for a life insurance plan gets more and more expensive. So, if a person decides to buy a new plan at a later point in time after he/she has quit the organisation, the plan will turn out to be much more expensive than it would have been earlier.
• Critical illness benefits: A person’s employer’s policy may or may not have a critical illness benefit rider but he/she can opt for one if he/she purchases a separate policy. A critical illness rider provides a certain amount of money to the policyholder in case he/she is diagnosed with a serious illness.
• Helps create savings: Those who are spendthrifts and worry about not being able to save enough by the end of the month/year, can opt for a life insurance plan. It will become a financial asset that will grow with time based on the type of insurance plan one has opted for. When a person is in need, a money-back plan or a ULIP will help recover all the money invested over the years.
• Leaves an inheritance: Individuals who wish to leave an inheritance but have no asset as such, can opt for a life insurance policy. It will help build a stable future for one’s children and be useful when they need it for education or other purposes.
• Tax-saving tool: As per the Income Tax Act, 1961, the premiums paid by the policyholder towards a life insurance policy can be claimed as a deduction from one’s income. The employer’s life insurance policy, on the other hand, will only make the employer eligible for the deduction.

Once a person avails sufficient life insurance coverage, he/she will have peace of mind as the policy is an assurance that the family will have enough financial aid when he/she is not around. It is, hence, imperative for every individual who has dependents to purchase a life insurance policy.