Question:

I work for an IT company Here in Houston, Texas.  My companies Group life insurance seems to be more affordable way to get life insurance coverage compared to other life insurance policies, is it true?

Ann

Houston, TX

Answer:

Great question!

The definition for group life insurance is a life insurance policy where a single contract covers an entire group of people. Generally, the life insurance policy owner can be an employer or an entity, such as a labor organization, and the life insurance policy covers the employees or members of the group. Group life insurance is often provided as part of a complete employee benefits package. In most cases, the cost of group coverage is far less than you would pay for a similar amount of individual protection. So, if you are offered group life insurance through your employer or another group, it is a good deal – especially if you don’t have other life insurance or if your personal coverage is inadequate.

As the policy owner, the employer or other entity keeps the actual group life insurance policy which is called the “master contract”. All covered individuals typically receive a certificate of insurance. Although this certificate proves that you are insured, it is not actually a life insurance policy. As with other types of life insurance, group life insurance allows you to choose your beneficiary.

Term insurance is the most common form of group life insurance. Group term life insurance is typically provided in the form of yearly renewable term insurance. When group term insurance is provided through your employer, the employer will pay for most (and in some cases all) of the premiums. The amount of your coverage is typically equal to one or two times your annual salary. Group term coverage remains in force until your employment is terminated, or until the specific term of coverage ends. Generally, you have the option to convert your group coverage to an individual policy if you leave your employer.  However, most people choose not to do this because individual premiums tend to be much higher than group premiums. If you are over 50 and or suffering from cancer or some other infirmity.  It would be good to go with group life insurance.  Typically, only those who are otherwise uninsured take advantage of this conversion option.

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Have a nice day…

-Author