In the dynamic landscape of employee benefits, the Salaried Term Plan has emerged as a groundbreaking Financial safeguard for employees.
This innovative insurance product has gained traction in India, providing a robust shield for salaried individuals and companies. In this blog post, we’ll explore the intricacies of Salaried Term Plans, examining their key features, eligibility criteria, benefits, and more.
Table of Contents
What is Salaried Term Plan?
A Salaried Term Plan is a specialized insurance product tailored for individuals employed in various organizations. This plan not only offers financial security to employees but also serves as a comprehensive group insurance solution for companies. It stands as a testament to the evolving nature of employee benefits, addressing the unique needs of the modern workforce in India.
Key Features of Salaried Term Plan:
- Group Coverage: Salaried Term Plans are designed to cover a group of employees under a single policy, making it an efficient and cost-effective solution for employers.
- Comprehensive Protection: The plan provides coverage against the financial uncertainties of life, offering a lump sum payout to the nominee in the event of the insured’s demise.
- Flexible Sum Assured: Employers can choose a sum assured that aligns with the financial needs and responsibilities of their employees, providing a customized approach to coverage.
- Affordable Premiums: Salaried Term Plans often come with competitive premium rates, making it a budget-friendly option for both employees and employers.
- Additional Riders: Employers have the flexibility to enhance coverage by adding riders such as accidental death benefits, critical illness cover, and more.
Who Can Choose a Salaried Term Plan?
Salaried Term Plans are ideal for both employers and employees. Companies looking to provide comprehensive group insurance to their workforce can opt for this plan. Likewise, individual employees seeking financial security and protection for their families can benefit from being part of a group insurance scheme.
Eligibility Criteria for Salaried Term Plan:
The eligibility criteria for Salaried Term Plans may vary among insurance providers. However, generally, employees between a certain age bracket and in good health are eligible to be covered under the plan. Employers can extend this benefit to all full-time employees, ensuring a holistic approach to employee well-being.
When Did the Plan Launch in India?
The Salaried Term Plan made its debut in India in response to the changing dynamics of the workforce and the increasing need for financial security. Although the specific launch dates may differ among insurance providers, the overarching trend gained momentum in recent years.
Benefits of a Salaried Term Plan in India
Financial Security:
The plan ensures that in the unfortunate event of an employee’s demise, their family receives a lump sum amount, providing financial stability during challenging times.
Employee Retention:
Offering a comprehensive group insurance plan is a powerful employee benefit, contributing to higher employee satisfaction and retention rates.
Tax Benefits:
Premiums paid towards Salaried Term Plans may be eligible for tax deductions under Section 80C of the Income Tax Act, offering a dual benefit of protection and tax savings.
Reasonable Premiums:
Term insurance plans are among the most affordable forms of life insurance available today, providing similar coverage amounts as traditional life insurance plans at a fraction of the premium amounts. This is mainly due to the lower tenures of such plans which can only be extended through periodic renewal.
Flexibility:
Some term plans may allow for the degree of coverage to decrease throughout the tenure in situations where the policyholder has taken on debt in some form such as loans. The coverage decreases over time as debts are slowly repaid over this duration. Alternatively, term insurance plans may also increase the payout amounts to account for inflation or return the premiums paid on the expiry of the tenure as a maturity benefit. Finally, some plans may also offer investment options that generate income over the tenure and add to the final payout amount on expiry. Paying slightly higher premiums is the most common prerequisite for such adjustments.
Coverage of Additional Risks and Illnesses:
Paying a small amount in addition to the monthly premium may allow policyholders to gain coverage for additional risks such as hereditary or critical illnesses or even accidental impairments. They may also allow top-ups that increase policy coverage at important junctures in their lives such as marriage, parenthood etc.
Disadvantages of Salaried Term Plan:
No Cash Value:
Salaried Term Plans do not accrue any cash value over time, as they are pure protection plans. This means that if the insured survives the policy term, there is no maturity benefit.
Limited Flexibility:
While the plan offers comprehensive coverage, it may lack the flexibility found in some investment-oriented insurance products.
Where & How to Buy Salaried Term Insurance?
Salaried Term Plans are widely available through insurance providers, brokers, and agents. Companies can consult with insurance experts to choose a plan that aligns with their employee benefits strategy. Individual employees can inquire about the plan through their HR departments or directly approach insurance providers for personal coverage. Finvest India has the right expertise to deal with the valuation of Human Life Value and provide the right coverage of Term Insurance.
Documents Required to Enroll for Salaried Term Insurance:
To enroll in a Salaried Term Plan, employees may need to submit the following documents:
- Proof of Identity: Aadhar card, passport, or driver’s license.
- Proof of Address: Utility bills, rental agreement, or Aadhar card.
- Income Proof: Salary slips, Form 16, or income tax returns.
- Age Proof: Birth certificate, passport, or school leaving certificate.
- Nominee Details: Information about the nominee, including their relationship with the insured.
Conclusion
The introduction of Salaried Term Plans in India marks a significant milestone in the realm of employee benefits. As companies prioritize the well-being of their workforce, these plans offer a comprehensive and cost-effective solution. While understanding the advantages and disadvantages, both employers and employees must explore the diverse features of Salaried Term Plans and make informed decisions to secure a brighter future.
Summarizing
- Picking a policy that suits your needs in the long term is crucial to getting the most out of term plans.
- Ensuring that you account for liabilities such as existing debt when choosing your coverage amount, will allow your family members to avoid such burdens in the event of your passing.
- It is best to choose a coverage amount equal to or greater than 15-20 times your annual household expenses.
- It is also vital to account for your age at the time of soliciting the policy concerning the number of years you will be expected to remain in the workforce.
- Additionally, purchasing term insurance will be easier when you are younger as you will likely be regarded as a lower-risk investment by insurance providers when compared to older policyholders.
- It may also be cheaper to purchase policies online as brokerage charges are often absent in such cases.
