LIFE INSURANCE

The Pro's And Con's Of Group Life Insurance

Group Life Insurance is a benefit often offered by employers as part of their employee benefit package. In the United States 41% of all life insurance policies were group policies. That translates to more than eight billion dollars annually.

Though there are other group policies as well, employee group life insurance is the most common. The policy, like group medical coverage is offered to everyone employed by that company. There are some good reasons to consider group life insurance. Let’s look at a few pros and cons of group life insurance.

Pros

1. It is easy to apply for and easy to get coverage. Unlike private and individual life insurance policies, there are no health exams to go through and no embarrassing questions. The same rules apply to your spouse and children. There are no requirements. They are accepted on the policy as part of the group for a very small monthly payment. The policy is offered to the group as a whole. The insurance company factors the number of employees, the ration of men to women, the average age of the employees and type of work they do. You can’t be turned down.

2. The base policy is often free or nearly free to the employee. He can add to the coverage for a minimal amount of money. As far as life insurance goes, this is a great deal for the employee.

3. There is nothing for you to keep up with. The policy is handled by employer. You are given a certification letter that you have the coverage.

Cons

1. You have no control on the policy. The policy is a group policy and the coverage is decided across the board. The only part you have any say in is the increased dollar amount which you can increase or decrease annually.

2. When you leave the company, you leave the policy.

3. If the company decides to cut the policy for whatever reason, you have no control on that either. As easily as you got the coverage; you lose the coverage.

4. If you are young and healthy but work with people who are older and unhealthy; you may get a better rate on your own. Group life insurance is in essence a term life policy. The term lasts as long as your involvement with the business. Term life insurance is very inexpensive for a young person in good health. You should check around and see if your coverage can be better. Of course never turn down the free insurance. If your employer is going to pay for you to have life insurance, take it.

Experts agree because the group life insurance is based on your employment, it should not be your only policy. Have a back-up policy to protect your family in the event that you change jobs.