iQuanti: Group life insurance can provide you with basic coverage so that your loved ones are financially supported if you pass away. If your employer offers this type of life insurance, purchasing this policy is a great way to get affordable coverage. But if you’ve never had group life insurance before, you might be wondering if you qualify. Let’s take a closer look at what group life insurance is, who may be eligible for it, and the pros and cons of a group life insurance policy.
What is group life insurance?
Group life insurance is any life insurance policy offered by an employer or similarly sized organization, such as a union or association. These life insurance policies generally work as term life insurance policies, meaning they have a set expiry date, but are often less expensive.
Group life insurance allows your beneficiaries to receive a small death benefit if you die, which is often equal to about one to two times your annual salary. Your beneficiaries can use this payment to cover funeral expenses, medical expenses and living expenses. Keep in mind that your group life insurance policy will only last as long as you are part of your business or organization. So you won’t be able to take it with you if you change jobs.
Which employees are eligible for group life insurance?
Different companies may have different requirements for their employees to obtain a group life insurance policy. Some companies may allow only full-time employees to benefit from group life insurance. Others may require employees to spend a predefined time at the company in order to obtain coverage.
Be sure to discuss these requirements with your employer. It may be beneficial to purchase an individual life insurance policy if you want coverage and know that you will not meet the standard requirements for a group life insurance policy.
The pros and cons of group life insurance
Group life insurance policies have advantages and disadvantages that you should consider when deciding whether to obtain coverage:
Group life insurance policies are usually very affordable — even free, in some cases — and can also be cheaper than an individual policy offered outside of your employer’s benefits package. Even if these policies don’t offer everything you want, you can still consider buying them and getting an additional life insurance policy that will give your family even more security and coverage.
In addition, group life insurance often does not require a medical examination. This means employees who are not in good health can still easily qualify for low-cost or free coverage.
Although group life insurance options are more affordable, they may not be as flexible as insurance purchased outside of your benefits package. Because your employer provides these benefits, they can control the policy contract and, therefore, the terms of coverage. For example, if you want an accidental death rider to supplement your insurance coverage, but your employer does not offer the ability to add riders, you may need to purchase a separate policy.
Another disadvantage of group life insurance is that you usually cannot take the policy with you if you leave the company. So, those planning to change jobs soon may want to consider individual life insurance instead.
The bottom line
Group life insurance is a great option for many employees, but may not be enough for those who need more coverage and long-term flexibility. Even if you qualify for a group life insurance policy, only you can assess whether this type of life insurance is the right decision. By doing your research and weighing the pros and cons, you’ll take steps to get the best life insurance coverage for you and your loved ones.
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