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Discontinuation of Company Group TERM Insurance Plan

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27 May, 2021 by  Sanjay Viswanadha

Hi All,


I have a group term insurance plan with Aditya Birla from past 2 years and its due for renewal next month. I was updated by my company that you will receive a call from Aditya Birla and they will intimate you with few changes.

  1. I received the call from Aditya Birla and they say that due to this pandemic there are some changes made and you cant continue the existing Group Term Insurance Plan which your company offered and need to move to new individual term insurance plan.
  2. The earlier premium was Approx 8,000/- plus and now they say its Approx 20,000/- plus.
  3. They say IRDA has asked to discontinue the Group Term Insurance which I am not sure :)


My query is I have paid premium for 2 years and now whether the company can bluntly discontinue the policy. If YES nothing much to do :) If NO can you please guide me how to take it forward.


Appreciate your expert guidance on this.


Regards

Sanjay

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1 Answer

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27 May, 2021

Sanjay,


I doubt if there is an IRDAI regulation to this effect. But, regardless of the IRDAI regulation, a Group Term Insurance contract can be terminated at the time of renewal by both your Company & the Insurer. Unlike Individual Term, a Group Term policy is an annually renewable contract which can be called off at the time of renewal. Same is the case with Group Health. This is why it is always advised to buy your personal insurance covers. The Company provided Insurance covers should be treated as a bonus.


Instead of migrating to the individual term offered by Aditya Birla, I would recommend that you compare Term Insurance from various Insurers on an aggregator website like Policybazaar & carefully opt in. Because, in any case, there is no continuity benefit that you get while moving from a Group to Individual Term.


Hope this helps. Best Wishes,


Asad Akbar



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27 May, 2021
Sanjay Viswanadha
Hi Asad, Really appreciate your quick revert. But, my only point is when a company offered us to choose a plan voluntarily and we are paying the amount from so many years all of a sudden how can they stop. If I had paid this policy for 10 years and all of a sudden they bluntly say we stopped it its a loss to the individual. I think company should be aware of this and they should have intimated before taking the policy that it can be stopped at any point of time at the discretion of insurer or company :). Anyhow, thanks for the update and for a common man these are really tricky and only option we should be more cautious. Thanks once again ! Regards Sanjay
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27 May, 2021
Your concerns are valid. Put this across to your HR & understand why they have decided to call it off. Feel free to revert if you have any questions. Take Care
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