Consumers can choose from a number of different types of life insurance policies. No matter what type of insurance you choose, group life insurance is a good benefit for employees and members of an organization to have. Group life insurance is provided through the employer or nonprofit organization at little or no cost to the member or employee. The coverage is limited, but it is easy to apply and be approved. You can also choose to purchase additional coverage separate from the group policy if you wish. Let’s take a look at group life insurance details and some information on the benefits it may provide to you and your team.
What is Group Life Insurance?
Group life insurance is a type of life insurance plan offered to workers, employees or members through their employer, association, labor organization or another large-entity party. Group life insurance is a common policy for people to have throughout the country. It’s reasonably priced, sometimes even free to the employee, but the coverage is typically lower than other insurance policy options. Group life is usually offered in conjunction with an employee or member benefit package, which may include other types of insurance coverage extended to the employee and their family members.
The group life insurance policy is one single contract, but the contract extends to a group of people. Group life is essentially a wholesale, discounted policy that allows for the cost for individual employees and members to be much lower than it would be for an individual policy. This feature can make it an appealing option for employees, especially if they would have a harder time getting coverage outside of the group policy.
A group policy is generally a term life policy, which means that the coverage only lasts for a certain period of time. However, group policies are renewable each year during the company or organization’s enrollment period. Those who are receiving the coverage through the group policy are given a certificate of coverage. The certificate is needed in case coverage is terminated by leaving the organization or company and the individual must provide it to their next insurance company.
Those who have group life coverage typically don’t pay out-of-pocket costs. If an individual chooses to get more coverage in addition to the group coverage, the part of the premium payment that pays for the extra coverage is deducted from that individual’s paycheck. Extra coverage is not required, but some feel it is necessary to get the coverage that they need for themselves or their family.
Those who are insured are required to provide one or more beneficiaries prior to the policy beginning coverage. Beneficiaries can be one or more individuals and can be changed at any point once coverage begins. Just as with any other life insurance, the beneficiary or beneficiaries will receive the death benefit upon the insured’s death. Though most people choose their family members to be the beneficiaries of their policies, individuals can also name third parties, business entities or even charities or non-profit organizations as their beneficiaries. Beneficiaries have virtually no limitations on how they can use the death benefit that they receive from their policy payout.
Is Group Life Insurance Easier to Get?
Getting group life insurance is fairly easy to get on an individual level, as all employees and members who are part of the company or organization are guaranteed coverage. Typically, you just apply during the enrollment period set forth by your employer or organization.
Enrollment sometimes isn’t allowed for new employees or members until after a certain probationary period, but this period can vary in length. However, the application process and underwriting process are usually easy for group life insurance.
Group life insurance is easier to get than an individual policy because no medical exam is required to be approved or qualify. Therefore, whether you have a medical condition or not, it does not affect whether you are able to get the group life coverage. If you are otherwise uninsurable, then group life insurance is definitely easier to get than any other type of policy. This feature can make these work-related policies appealing to older men and women and employees who have a critical medical condition.
What are the Benefits of Group Life Insurance?
One of the major benefits of group life insurance is its price. Group life members usually don’t have to pay much for coverage — sometimes they don’t have to pay anything at all. Group life is an easy way to get coverage for little to no cost to you. It also allows you to get coverage for your family through your employer like you do through your health insurance.
The convenience of this employee life coverage is also a benefit. The paperwork involved with applying for insurance is usually included in the documents you fill out when you’re getting hired. In addition, usually people in the organization, such as HR representatives, can answer any questions you may have.
Getting group life insurance is additionally easy to apply for and easy to be approved. Because policies ensure guaranteed coverage for all employees or members, as long as you’re a part of the company or organization, you can easily get approved. A medical exam is generally not required for group life insurance, so even those with medical conditions can easily get the insurance protections that they need. There are no prerequisites involved. With an individual policy, the insurer considers a number of factors before offering coverage that are not present in the group application process (like an individual’s medical history or blood test results).
While your insurance through a group life policy is tied to your employer or the organization you’re a part of, you are sometimes able to take the policy with you if you choose to leave. In other cases, the group life policy may be able to be converted to an individual policy if you’re leaving your company for a different job. This feature means your premiums will be higher, but for those who may be uninsurable otherwise, the conversion is easier than attempting to get your own policy elsewhere.
Can Group Life Insurance Cover Key Personnel?
Group life insurance doesn’t typically cover key personnel within the context that their death would affect the company as a whole. While key personnel can purchase group life insurance coverage, this coverage extends to the individual’s beneficiaries as any other employee.
In order to cover executives, founders, owners or other critical employees, businesses may want to consider investing in a key person insurance policy. The key personnel that qualify for this type of insurance are those whose disability or death would affect the company’s stability and finances. Key person insurance can help pay for things like training and employee search necessities to replace the key person who dies or becomes disabled to the point that they cannot work.
Compare Life Insurance
The company that you choose to offer your group life insurance policy can be just as important as the policy you choose for your employees. Benzinga offers insights and reviews of the following group life insurance coverage providers. Consider beginning your research with the links below.
- securely through Ladder Life Insurance's websiteBest For:Adjustable coverage
Ladder Insurance Services, LLC (CA license # OK22568; AR license # 3000140372) distributes term life insurance products issued by multiple insurers – for further details see ladderlife.com. All insurance products are governed by the terms set forth in the applicable insurance policy. Each insurer has financial responsibility for its own products. Coverage amounts vary by state.
- securely through Haven Life Insurance's websiteBest For:Under Age 64
Haven Term is a Term Life Insurance Policy (ICC21 Haven Term in certain states, including NC) issued by C.M. Life Insurance Company (C.M. Life), Enfield, CT 06082. In New York (DTC-NY) and California (DTC-CA), it is issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001.
Is Group Life Insurance Right for Your Business?
Smart business owners know that a business is only as strong as its employees. Attracting and retaining high-quality employees in a competitive marketplace often comes down to employee benefits. If you’re a business owner struggling to keep key personnel on your staff, you may want to consider expanding your list of benefits to include group life insurance.
Frequently Asked Questions
What is the difference between group life insurance and traditional life insurance?
The main difference between group life insurance and traditional life insurance is that group life is provided by an employer whereas traditional life is purchased by an individual and that individual owns the policy. Traditional life insurance is entirely unrelated and not tied to your work at all, while group life insurance is tied to your employer.
Do you pay for group life insurance?
Whether you pay for group life insurance is dependent on what your employer or organization offers. Group life insurance is typically offered for free through your employer, but if you do pay, then payment is typically minimal and less than you would pay for a traditional monthly life insurance premium.
Benzinga crafted a specific methodology to rank life insurance. To see a comprehensive breakdown of our methodology, please visit our Life Insurance Methodology page.