Companies provide different kinds of perquisites to their employees by way of employee welfare and motivation. One trend that has been observed across many companies is that they provide life cover to their employees under the group insurance scheme.

Group insurance provides a basic life cover to the employees of the company. This amount is payable on the employee’s death during the course of his tenure in the company.

This is one of the most beneficial provisions that any company could provide to its employees. In certain cases, the cover even extends to the employee’s family, covering the spouse and the children. Of course, all this depends on the employee’s designation and the number of years of service.

Though group insurance is very useful, it is important to understand that only being covered under the group insurance policy is not enough. There are several shortcomings with such a life cover.

Firstly, most group life insurance policies provide a cover to an employee as long as he is working with that company. On termination/change of employment, the life cover ceases to continue. Policy-seekers know that the premium calculation depends on the age of the policyholder and the tenure of the policy. If an employee has been covered under the group insurance scheme at the age of 27 years (at the time of joining) and has not taken an additional cover, then on termination/change of employment at say when he is 40 years old, he will have to pay a huge premium to get life insurance at that age. If he expires at that age without a life cover, his family will have to either liquidate his assets or dip into his savings to take care of the future.

Another point worth noting is that the life cover under group insurance is very minimal depending on the designation and years of service. So if an employee wants to enhance that cover in line with his earnings and lifestyle, he needs to take an additional cover.

So group insurance provides a very basic cover, which is the amount paid to the employee’s nominee on his death. As the life cover works like a term assurance policy, there are no survival benefits that could benefit an employee on his retirement. This means that some of the most important benefits like retirement benefits (as in an endowment plan) and critical illness benefits are not fulfilled with group insurance cover.

Therefore employees covered under group insurance schemes need to enhance their life cover. They ought to have an endowment plan with riders (like critical illness benefit for instance) to go with their term assurance (under group insurance) plan so as to have a more comprehensive life cover.

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