What Is Group Term Life Insurance

Group term life insurance is one type of coverage available, and knowing what this is and how it works may help you make the best choices for you life insurance needs. Like the name implies, group coverage involves an entire group under a policy, and not just an individual. One of the most common forms of this coverage is when an employer offers life insurance as part of a total employee benefit package. In this case the employer usually pays part or all of the premiums for the coverage, and all eligible employees are covered as a group. One of the benefits with group term life insurance is that the premiums charged for each individual covered in the group are generally a lot lower than they would be for an individual policy. These policies are usually renewed every year, and they do not build up any cash value or involve any investment components. The entire group is covered, and the main policy is held by the employer. Each group member will receive a certificate of coverage, but will not actually receive a policy.

Group term life insurance also offers tax benefits, especially when it is offered as a benefit of employment. The premium amount that the employer pays is not normally taxed on the employee, unless the premiums are over a specific amount, normally fifty thousand dollars a year. This coverage is not just offered by employers either, there are senior citizens groups which buy group coverage, and other organizations and entities as well. With group term life insurance, there are some important facts to consider. These are term life policies, which mean they are not permanent and will only provide life insurance coverage for a specified term. The term with group coverage is normally a one year period if it is offered by employers, but this term can range widely. Another factor when an entire group is covered is that the coverage amount may not be flexible. You may have to take the policy amount offered, and then buy an additional policy to get the remainder of the coverage that you want to provide complete financial protection to your loved ones.

If you are offered group term life insurance through your employer or as a member of another covered group, you may be smart to take it, even if you have to pay for part or all of the premiums. Group coverage is usually cheaper than other types, so you will save money without lowering your coverage amounts. Many times this coverage is offered by an employer in limited amounts, and there are other ways to get this coverage as well. Some banks, credit unions, and other financial organizations may offer a policy ranging from one thousand to ten thousand dollars at o charge. If you are considering extra coverage, on top of what you have as a group member, it may be a wise financial move to use the same insurer, because your premiums may be lower.