Group Life Insurance

Are you looking for a life insurance policy with some customization options? Well! You may consider getting a group life insurance plan. It’s a more affordable way to secure a life insurance plan rather than getting it via a private insurer.

Such types of policies are often offered by employers (companies) as a part of their employee benefit package. It could be a quick and convenient way to secure your family’s financial future that would be helpful in case of your death. Want to know more about this insurance plan? Let’s have a quick check!

What is Group Life Insurance?

A type of life insurance offered by employers and other large entities is called group life insurance. It is a single contract between an insurance company and a group of people that provides coverage to them. However, this plan is usually for those who work for the same company.

The employer owns the insurance plan that also covers the employees. The beneficiaries of the employer get a payout or death benefit after the insured’s death is covered by group insurance.

How does it work?

These insurance plans are a type of term life insurance, which means it only lasts for a set number of years if not renewed. However, if you renew the policy, its price can fluctuate based on different factors like age and average health of the company employees, changes in internal insurance company plans, and others.

Remember that with a group insurance plan, a person’s health and age are not assessed by an insurer like an individual or private policy. It’s one of the main perks of group life insurance for older people or someone having some health issues.

Benefits of Group Life Insurance

The biggest advantage of this insurance plan is its value for money. With group life insurance, group members have to pay very little, if anything at all. Other benefits of this plan are:

Less expensive than an individual plan
No medical exam required
Easy to qualify
Able to add coverage for dependent
Premiums are covered by employer or payroll deduction.

How much does it cost?

The cost of group insurance may vary as it depends on the employer, the insurer, and the characteristics of the group like the average age of the employees. Meanwhile, the average cost of this insurance plan bought through an employer is typically low.

Types of Group Life Insurance

Commonly there are three main types of group life insurance. These are:

Group Term Insurance

It is one of the most common types of group insurance that renews each year. It is the least expensive option as it provides only a death benefit.

Group Universal Life Insurance

It is an expensive type of group insurance as it comes with an opportunity to build up a cash value component along with death benefit.

Variable Group Universal Life Insurance

This plan is similar to group universal life insurance, however, it provides an investment option for increasing the potential returns on the cash value accumulation.

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What is the purpose of a Group Life Insurance Plan?

The insurance plan is a common employee benefit that offers a death benefit or lump sum amount to the policyholder’s beneficiaries. The beneficiaries get the death benefit if the insured is part of the organization at the time of death. In addition, the main purpose of this plan is to provide financial support and security to the families and dependents of such employees.

What happens to this coverage after retirement?

Once the insured leaves the company or organization, group insurance terminates. Leaving includes all the terms like fired, quitting, switching jobs, or retirement. However, some employers can convert their group coverage into an individual plan on retirement, but the employer or company will not pay these premiums.

Is it possible to convert a Group Life plan into a private life insurance policy?

While leaving your employer, you can convert your life insurance plan to an individual plan because some group plans offer a conversion option. But before doing that, it’s crucial to know that after conversion your premiums will be higher than if you opt to buy a comparable individual life insurance plan.

Is Group Life Insurance worth it?

Well! It depends. Group insurance is a significantly cheaper option than alternatives. It is because the insurance company offers lower premiums and the employer also subsidizes it further. Moreover, it is a better option to get group life insurance instead of having no life insurance at all, especially when your employer is covering the cost.

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Our licensed agents at Insure Guardian strive to offer you free consultation and guidance about your life insurance plan. For a free quote consult our professional now at +1(800)6956528.