Group Life Insurance

Group Life Insurance or “company life insurance” is a benefit employers offer their workers.

With a group life insurance policy, the insurance contract is between the group and the life insurance company, with each employee receiving a certificate of coverage.

It is easy to qualify for group insurance because there are no medical questions.

Company insurance is often offered as a factor of your income at no cost as part of your basic benefits package. Typically the death benefit is one or two times your annual salary.

Many company-sponsored plans also allow employees to purchase more significant amounts of voluntary coverage at group rates.

You must pay a premium for the additional coverage at the published group rate.

Most additional coverage requires a brief questionnaire about your medical history and occasionally an exam.

Group Life Insurance Explained

• Coverage may not meet your individual needs: Policies are often only designed to provide standardized protection and benefits.
• Costs generally increase: Rates for coverage are age-based schedule (i.e., 55-59, 60-64) and increase costs dramatically at older ages.
• Your coverage may end if you leave your job or at retirement: Most employer-sponsored group policies are term life insurance and only cover you for as long as you work for the employer.
• Your employer has the right to terminate the coverage: This can be an issue when an employer decides to reduce benefits as a cost-cutting option.
• Only some policies are portable: Portability allows employees to convert their insurance coverage to an expensive individual policy upon termination. Ensure you check with your benefits administrator on the portability of the voluntary coverage.

• Bankruptcy: If your company ever seeks bankruptcy protection, you could lose your life insurance benefits.

Group Life Insurance Vs. Term Life

People considering group life insurance should also compare long-term costs with individual term coverage purchased in the open marketplace.

It is easy to find a better deal shopping for an individual term life policy if you are healthy!

Nonsmokers in excellent health can generally qualify for a preferred plus or preferred rate class with premiums substantially lower than those offered through the group.

Not to mention, with an individual term life insurance policy, you can lock in the rate your rates for 10, 15, 20, or even 30 years. Your premium will increase with a group life policy as you age (typically every five years).

So, individual term life gives you more options to choose from compared to company life insurance. This allows you to select the type of life insurance policy for your needs.

For example, a 10-year term life insurance policy will always have a level premium for ten years.

So, a 10-year level term plan may be ideal for middle-aged people looking at protecting their income until retirement.

While a 20-year term or 30-year term life insurance plan has level premiums for longer durations of either 20 or 30 years.

A 30-year term plan is ideal for younger people needing to protect a 30-year mortgage or for those needing to protect their income from surviving family members.

As you can see, individual term life coverage is cheaper and can always be tailored in duration to address your future needs.

Banner, Prudential, and Lincoln Financial offer fantastic prices on term life insurance.

If coverage is desired for a longer-term duration, the cost savings can be even more substantial with a level-term policy or guaranteed universal life.

Guaranteed universal life can also be structured at a competitive price point with no cash value with guaranteed coverage to last a lifetime.

Outstanding insurers offering competitively priced universal life include Corebridge, Penn Mutual, Pacific, and Protective. 

So, before you automatically elect for additional group coverage, please get comparable quotes for an individual life insurance policy.

Comparing Life Insurance Quotes

How would you like to do a cost analysis of how your group life insurance compares to individual term life?

No problem!

Remember, your premiums for term life depend on your general health. Your price is based on height, weight, medical background, and family history.

Don’t Worry!

People taking preventative medications or trying to get life insurance with medical issues can save money with individual coverage.

How can this be true?

Remember, your group life insurance premium will generally increase in cost every five years. Plus, the rates for company insurance are much higher because every employee, regardless of health, can be approved for coverage.

So, you can save money over longer durations by locking in your rates for 20 or 30 years.

Want to compare group term life insurance with our term life coverage?

You can use our free life insurance rate calculator to compare life insurance quotes based on your family’s needs.

Compare Life Insurance Rates