iQuanti: Many employers offer group life insurance to employees as part of their benefits package. This type of policy can provide basic coverage and give your loved ones additional funds in the event of your death. But group life insurance may not be the right option for you. Depending on your coverage needs and other factors, you may want to purchase an individual life insurance policy in addition to or instead of your group life insurance policy. Read on to learn how group life insurance works, how you can decide if it’s worth it, and some alternatives to consider.
How does group life insurance work?
Group life insurance is a life insurance policy offered by an organization or company to its members or employees. Typically, these policies are a form of term life insurance, but with more limited coverage. If you die, your beneficiaries will receive a small death benefit that they can use to cover funeral expenses and end-of-life costs.
Group life insurance policies are usually less expensive than policies purchased separately and sometimes even free. However, it should be noted that employers control group life insurance policies, so they decide what to include in coverage. Also keep in mind that this type of policy is generally not transferable, so you cannot take it with you if you leave the company.
How do I determine if group life insurance is worth it?
For many life insurance customers, group life insurance policies are a fantastic option. Whether you’re looking for standard coverage and low premiums or free coverage, a group life insurance policy can meet your insurance needs in an affordable and convenient way.
However, if you want your beneficiaries to receive a higher death benefit or the flexibility to maintain coverage if you change jobs, a group life insurance policy might not offer what you want. For example, you may want enough coverage for your family to replace your income for several years if you die unexpectedly. Or, if you work in a risky profession, you may want to be able to purchase additional death benefit riders, but these may not be offered by your company’s life insurance policy. In either case, purchasing an individual life insurance policy with coverage tailored to your preferences may be the right choice.
Some clients may also wish to purchase an individual policy in addition to the group life insurance they already have to maximize coverage. Fortunately, you’ll probably be able to do this without interfering in any way with your group life insurance policy.
What are the group life insurance alternatives?
For employees who may want more than the benefits offered by standard group life insurance coverage, several options are available:
Term life insurance
Term life insurance is a term life insurance policy that typically lasts between 10 and 30 years. If you die while the policy is in force, your loved ones may receive the death benefit payment. Remember that once term life insurance expires, you may need to purchase a new policy to continue to be covered.
Whole life insurance
Whole life insurance policies, once purchased, last for the lifetime of the insured. This type of coverage is generally more expensive than term or group life insurance policies. However, whole life policies have the added benefit of accumulating cash value with every premium payment. Cash value can help you build wealth over time, and you may have the ability to withdraw or borrow as needed.
Universal life insurance
Universal life policies are similar to whole life policies with some added flexibility. With a universal life insurance policy, you can adjust the amount of your death benefit to have some control over your premium payments. This way you have a little more wiggle room with your coverage and can still receive the cash value and other features of a whole life insurance policy.
Get increased financial security with the right life insurance
Group life insurance is often a great idea for employees with standard life insurance needs. But for those who want more coverage or flexibility, there are other options available. You can purchase a term life, whole life or universal life insurance policy instead of or in addition to your group life insurance policy. By understanding how your preferences match up with these different types of policies, you’ll be able to find life insurance that meets your unique needs and fits your budget.
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