Common Myths About Group Life Insurance

Introduction

Group life insurance plays a major role as a financial safety net for a group of people in any organisation. Employees are a valuable asset to any company, so their safety should be a priority.

Also they need to clear all the myths and obtain group life insurance to make their employees and their families feel safe.

This blog explores the misconceptions that employers and employees have about group life insurance and addresses employers’ duty to obtain group life insurance for employees and their families well-being.

Myth 1: Group Life Insurance is only for Large Multi Nation Corporations(MNCs)

Fact

Group life insurance needs to be provided to employees of small and medium enterprises(SMEs) in the United Arab Emirates(UAE). SMEs can benefit from group life insurance, which helps to retain top talent and offers security for employees and their families. It allows SMEs to manage risks associated with employee health, accidents, and other unplanned events.

1. Cost-efficiency: Group life insurance policies have comparatively lower premiums than individual insurance policies because group life insurance covers a group of people, which spreads out the insurer’s risk.
2. Financial expenses: Employees can benefit from group life insurance by replacing lost income, covering final expenses, and more.
3. Coverage flexibility: In UAE, group life insurance policies offer flexibility by allowing members to pick enhanced coverage options such as high sum assured for critical illness or personal accident benefits.
4. Eligibility criteria: Group life insurance benefits are available for both UAE nationals and expatriate employees.

Myth 2: Employees don’t need group life insurance if they have workmen’s compensation policy

Fact

Workmen’s compensation policy covers injuries, illnesses, disabilities, or death that occur during work. On the other hand, group life insurance provides wide coverage. For example, it will cover accidents that happen anywhere at any time, including during leisure time, vacation, or traveling.

Group life insurance policies can cover people regardless of their age, gender, social status, and occupation. It also offers coverage to the insured member’s relatives, such as their parents, spouses, and children. Employees don’t need to undergo medical checkups or health assessments because group life insurance is usually standardised, which also reduces the need for large customisations and removes the complexities of the underwriting process.

Myth 3: Group life insurance is too expensive for employers

Fact

Group life insurance is cost-effective and offers lower premiums than individual plans, making it affordable for employers. It also has customisable options to fit various budgets, and employers may get an advantage in tax deductions for premiums.

Providing group life insurance can enhance a company’s benefits by helping to maintain and retain top talent. Additionally, investing in such coverage can deduct turnover costs and foster a more stable workforce.

Myth 4: Coverage is minimal and insufficient

Fact

Group life insurance in the UAE provides a lump sum payout to the family of a deceased employee with additional benefits. The amount to be paid is several times the employee’s salary up to the limit. Some common benefits of group life insurance in the UAE, such as

1. Accidental death

In UAE, group life insurance policies include an accidental death benefit, which provides additional pay if the employee dies in an accident. The benefit multiplies the employee’s salary, offering financial support to the family in the event of an accidental death.

2. Terminal illness

Group life insurance policies include a terminal illness benefit, which offers a total amount payout or income replacement if the employee is diagnosed with a life-threatening condition with limited life expectancy.

3. Permanent disability

Due to an accident or sickness, if an employee is permanently disabled, the total amount is to be paid. 

4. Temporary disability

Salary is set to be paid for time if an employee is temporarily unable to work due to an accident or sickness.

5. Medical expenses

Many group life insurance policies in the UAE also cover medical expenses related to accidents, reimbursing costs for treatment, hospitalisation, and recovery. 

6. Repatriation expenses

If an expatriate employee dies in an accident, the group life insurance policy compensates the cost of transporting the employee’s body back to their home country 

Myth 5: Group life insurance is only for saving tax

Fact

A common myth is that group life insurance exists only for tax savings. In the UAE, employers can benefit from tax deductions on premium insurance. While tax benefits are a consideration, the real value and major role of group life insurance is protecting employees, and UAE employers can benefit their workforce and their business.

However, tax savings can be a significant benefit; the true value of group life insurance lies in its ability to safeguard employees and enhance workforce well-being.

Myth 6: Employees will not get the insurance after relieving from the company

Fact

In the UAE, employees can convert their group life insurance to an individual policy if they pay an extra amount to the organisation. To convert this policy, the policyholder must visit the nearest branch of the insurance provider to complete the formalities. To port health insurance in the UAE, an employer needs to provide the necessary documents to the new insurance provider, such as the current policy, Emirates ID, visa copy, medical records, and any other documents particularised by the new insurance provider.

Conclusion

Employers have many misconceptions about obtaining group life insurance. However, without knowing its benefits, it might seem expensive and unnecessary. Group life insurance in the UAE offers comprehensive protection, enhances employee satisfaction and retention, and can even fit both large enterprises and small and medium enterprises(SMEs). Employers can gain clarity and confidence in obtaining group life insurance by partnering with trusted insurance service providers in the UAE, like CoverB.

Connect with experts at CoverB today for tailored insurance service for all your needs!