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Understanding Group Life Insurance and Its Benefits

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 Understanding Group Life Insurance and Its Benefits
Understanding Group Life Insurance and Its Benefits

Understanding Group Life Insurance and Its Benefits

Purchasing a life insurance policy is important as it only benefits you and your family in case some tragedy strikes. It doesn't matter what plan you buy, individual or group as long as you get one. Also, purchasing a plan relieves you from worrying overtime your and your family's financial future, in the event of your death.

Why Group Life Insurance is A Better Option?

Most employers offer group life insurance plans to their employees as a benefits as they hope, incentive will increase the productivity by boosting employees' morale. The group life insurance is not just beneficial from employers' view-point but it's good for employees as well due to lower cost of premium. Group life insurance either offer term or universal life insurance coverage. The best part it offers lots of options, which may or may not cost more, depending on cover you have chosen.

Group Life Insurance Plans

Below are provided names of most common group life insurance options one can choose from plans offered by employers:

  • Premium Waiver
  • Dependent's Term Life
  • Conversion Feature
  • Accelerated Death Benefit

A Premium Waiver

A premium waiver option is offered by various group life insurance plans. It allows employees to continue to receive life insurance cover if they get injured or suffer an accident. If an employee becomes permanently and completely disabled, in that case he/she can still get life insurance without having to pay premiums.

Dependent's Term Life

In this plan, insurance cover is extended to family members and means extra cost on part of the employee. Also, it could be necessary for the employee's family members to be in verifiable good health.

Conversion Feature

Conversion feature, a group life insurance policy allows employees to convert their plan from term to whole life insurance coverage without having to go through a new physical or the required evidence of good health. An amazing option for those nearing retirement, pension, or reaching an age where securing term life insurance becomes an issue (generally for people over 50 and those near 65 have a very hard time securing coverage).

Accelerated Death Benefit

Accelerated death benefit also referred to as "living benefits," is a common feature in many group life insurances. You can say it's an added bonus as you can be sure that you will not have to worry about finances in the event of a terminal illness. The technical definition of terminal illness differs from plan to plan but it's usually defined as disease that's incurable and leads to patient's death in 12 or less months.

Another common feature of most group life insurance policies is the percentage of the face value of the plan paid in case of terminal diagnosis. Though, accelerated death benefit doesn't pay out the face value of the plan in the event of death, it offers significant portion of the face value that could cover medical costs and expenses on arrangement etc. Generally, plan expires after these "living expense" are paid out, but some companies provide plans that pay beneficiaries even afterwards. Most group life insurance plans provided by employers have a face value worth 200% of the annual salary of the employee. This amount could vary, in case policyholder dies while working or traveling on business. However, for most part the maximum face value of company sponsored insurance plan is limited to double yearly salary. You should carefully read all the details and options of the plan to pick the right and best plan to cover all your needs.

Understanding Group Life Insurance and Its Benefits


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