What Is Group Life Insurance

Group life insurance can be a great way to get life insurance coverage at much lower rates, but what exactly is this insurance type and what does it offer? Group life insurance is a type of policy, and with this type one policy is taken out that covers an entire group of individuals. These policies are usually used by entities and employers, to provide coverage to members or employees at a much more reasonable cost. Labor unions, some citizens groups like AARP, and other entities and business may offer this life insurance coverage for free or for only a fraction of the true cost. Because the policy covers a larger number of people, the odds of death benefits being paid on them all are much lower, and so are the premiums because of this. Many times employers will provide this coverage as part of a total package for employee compensation, which can include medical, dental, optical, life, short and long term disability, and other insurance types, as well as retirement plans like 401k plans. The way that group life insurance works is a little different, because you will not receive the original policy. Instead you will get a certificate of coverage, and the employer or entity will keep possession of the master policy which covers all group members.

Because group life insurance is usually less expensive than individual life insurance, if you are a member of an eligible group than it is a good idea to take this coverage. You still choose you want to name as your beneficiaries, and they will still receive your death benefits if you pass away and a valid claim is filed. Group life insurance can include any type of life insurance policy type, and this includes term like, whole life, universal life, variable life, hybrid policies, and others. One of the most common types of this life insurance is term life, and with this coverage you are covered for the term specified in the policy as long as your premiums are paid on time. The term can be as short as one year or as long as thirty years, or any time period in between. With term life once the term is up then you are no longer entitled to a death benefit, and all of your premium payments are lost.

Group life insurance may vary in the amount as well, and it is common for many employees to have access to this coverage as an amount equal to a number of years worth of annual salary. Some employers and groups may offer one year of coverage, while others may offer five years or more, depending on the employer or entity offering the group life insurance. If you have coverage through your employer you are usually covered until your employer terminates your employment, you quit or resign, or until the coverage term of the life insurance policy ends. If you want affordable life insurance coverage at the lowest possible cost and you have access to this type as a group member, it is advisable to take it because you will probably not find coverage at a lower price.