Why? Because group life insurance comes with serious benefits for those who can qualify, and it may be cheap or even free depending on how you receive it. Let’s take a look at exactly what group life insurance entails and if it might make sense for you.
What Is Group Life Insurance - Group life insurance is a term used to describe any life insurance policy that covers an entire group of people. Commonly, this type of life insurance is offered within an employee or labor organization’s benefits package, so the coverage can cost far less than the market rate. In some cases, it may even be offered for free, or there may be both free and paid options.
Most importantly, group life insurance policies are offered to a group within a single contract, so there are no medical questions or medical exams required. The life insurance company assesses risk based on the entire group instead of the individual, so it doesn’t need to know your personal medical history.
This means you can qualify for group life insurance coverage (if you’re offered it) regardless of your medical history. You can even get group life insurance when you can’t get life insurance coverage separately on your own.
But remember that group life insurance coverage may not be sufficient to cover all your life insurance needs. If the group life insurance plan you’re offered has a death benefit that comes up short of what you think you need, you should consider supplementing it with a separate life insurance plan you buy on your own.
Invest In Multiple Insurance - You can have more than one life insurance policy at the same time. Many people who receive group life insurance through work also purchase a separate term life insurance policy.
And another reason to buy your own life insurance policy is that group life insurance is tied to your employer or the organization that offers it. This means that if you leave your job, you’ll lose your group life insurance coverage from that employer. Your employer can also decide to stop offering group life insurance as an employee benefit.
Like other types of life insurance, group life insurance can come in many different forms. The details of the coverage offered will depend on the life insurance company, the employer or organization’s budget and other factors.
Most importantly, group life insurance policies are offered to a group within a single contract, so there are no medical questions or medical exams required. The life insurance company assesses risk based on the entire group instead of the individual, so it doesn’t need to know your personal medical history.
This means you can qualify for group life insurance coverage (if you’re offered it) regardless of your medical history. You can even get group life insurance when you can’t get life insurance coverage separately on your own.
But remember that group life insurance coverage may not be sufficient to cover all your life insurance needs. If the group life insurance plan you’re offered has a death benefit that comes up short of what you think you need, you should consider supplementing it with a separate life insurance plan you buy on your own.
Invest In Multiple Insurance - You can have more than one life insurance policy at the same time. Many people who receive group life insurance through work also purchase a separate term life insurance policy.
And another reason to buy your own life insurance policy is that group life insurance is tied to your employer or the organization that offers it. This means that if you leave your job, you’ll lose your group life insurance coverage from that employer. Your employer can also decide to stop offering group life insurance as an employee benefit.
Like other types of life insurance, group life insurance can come in many different forms. The details of the coverage offered will depend on the life insurance company, the employer or organization’s budget and other factors.
Group Term Life Insurance - Most employer-offered life insurance coverage comes in the form of yearly renewal term life insurance. This type of life insurance is offered for a preset of a year. Some employers will provide a basic group life insurance policy to all of its employees for free as part of the benefits of employment. Group life insurance can be a nice perk of your job, especially if it’s free. However, in most cases, employer-provided policies are relatively small compared to what you’re likely to need overall in terms of life insurance, so you probably won’t want to rely solely on it to cover you in case the worst happens.
Supplemental Group Life Insurance - Often, employees who are part of a group life insurance plan can pay to add additional coverage. This type of additional coverage, known as supplemental group life insurance, lets employees pay the difference in premiums to achieve a higher death benefit and additional perks. Depending on your situation, getting supplemental group life insurance can make sense if the cost is lower than you’d otherwise pay for a similar individual policy. Again, though, your coverage is tied to your employer, so if you leave your job, you’ll lose your coverage.
Dependent Group insurance - Some employers that offer group insurance might also extend supplemental coverage to spouses and dependents on the condition that the employee pays additional premiums. Often the premiums are reasonable. However, like all group life insurance, this supplemental coverage is still tied to an employer or organization, so you can lose it if you switch jobs or if your employer decides to cut the benefit.
Accident Policy - Many employers and labor organizations also offer accidental death and disablement as part of their group life insurance plan. This type of coverage provides an additional cash benefit if the plan participant dies as the result of a covered accident or if they are dismembered during a covered event.
What To Consider - For those who can qualify for group life insurance, signing up for the basic policy offered by your employer almost always makes sense. After all, group life insurance offers financial protection for yourself and your family, and it can be very cost efficient based on the amount of coverage you receive.
Just make sure you’re not relying on group life insurance as the sole coverage to protect your family. While group life insurance can be an important part of your financial planning, you should make sure you have enough life insurance to replace your income and cover your family’s needs if you unexpectedly pass away.
Just make sure you’re not relying on group life insurance as the sole coverage to protect your family. While group life insurance can be an important part of your financial planning, you should make sure you have enough life insurance to replace your income and cover your family’s needs if you unexpectedly pass away.
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