Group Insurance

Maybe you’ve been meaning to buy life insurance but just haven’t gotten around to it. If you recently got a new job, or if it’s open enrollment season, you might have a chance to get life insurance through your employer at little or no cost. Many employers offer free life insurance as a benefit, known as group life. All you have to do is sign up, and sometimes enrollment is automatic.

Basic vs. Supplemental Group Life
Employers often, but not always, provide a small amount of life insurance coverage for free. That’s basic group life. Typical coverage amounts are $25,000, $50,000 or an employee’s annual salary, rounded to the nearest $1,000. You may also have the option to buy supplemental group life insurance. These plans generally allow workers to buy extra coverage — sometimes up to three or four times an employee’s annual salary.


Reasons For Buying Group Life Insurance Through Work
There are three main advantages to buying supplemental group life insurance through your employer: convenience, price and acceptance. Convenience is key to those who know they need life insurance but haven’t bought it yet. Getting coverage through work can be the easiest way to protect your family. It also can be a good deal, sometimes offering rates you can’t beat by shopping around.
Finally, people with serious medical conditions may qualify for a much better rate through the group policy than they could get on their own. A medical exam is not required, although you might have to fill out a detailed questionnaire.

Disadvantages Of Group Life Insurance
Most people are unlikely to stay with the same employer for their entire career, which brings up the first major disadvantage of tying your life insurance to your job. You might be able to convert your group policy to individual life insurance if you leave, but the cost could go up significantly.
Your next job might not offer group life insurance. You could go out and buy an individual life insurance policy, in that case. But the cost of life insurance rises as you age, and you never know when you might develop a medical condition that could seriously raise your rates or even make it impossible to get coverage.


How To Decide
The first thing to do is to take advantage of any free basic group life insurance offered.
Next, compare the cost of supplemental life insurance available through your work to what you can find on your own. You might find you can get a comparable deal on your own, in which case it’s not worthwhile to buy life insurance through your work. Even if the cost of an individual policy is slightly higher, it’s still probably a better bet because of its portability. If you have substantial life insurance needs, such as many dependents, you might consider buying an individual policy and supplementing it with life insurance through work.But if you fear you might not qualify for a good rate as an individual, perhaps due to a medical condition, group life insurance through your work is a good idea. Just remember the limitations, especially if you don’t expect to stay at the employer for a long time.