Group Life Insurance

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Having life insurance does indeed provide peace of mind that only comes from knowing that your loved ones will not be burdened in the event the unthinkable should happen.

Making Sense Out of Group Life Insurance

Group life insurance plans are often purchased by employers and offered to employees as a benefit. Employees benefit from group life insurance plans because they lower premium costs while employers gain a more productive workforce because morale is improved. Group life insurance plans may offer either term life coverage or even universal life insurance but one thing is certain: There are bound to be a lot of options to consider that may or may not cost more but which will certainly affect the type of life insurance coverage you receive.

Group Life Insurance Options

Some of the common options to choose from on many group life insurance plans offered by employers are:

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

Explanation of Options

• A premium waiver is an option on many group life insurance plans that allow an employee to continue receiving life insurance coverage in the event of an accident or injury. If the employee is determined to be permanently and completely disabled, then the employee can still receive life insurance coverage without paying premiums.
• With Dependent’s Term Life, the protection of the coverage is extended to other family members. This involves additional expense on the part of the employee and it may be necessary for the additional members to be in verifiable good health.
• A conversion feature on a group life insurance policy permits an employee to convert from term to whole life insurance coverage without the need for a new physical or the required evidence of good health. This is a good option for employees who are nearing retirement, pension, or reaching an age where securing term life insurance has become an issue (generally for people over 50 and those near 65 have a very hard time securing coverage).
• The accelerated death benefit (also known as “living benefits”) is a common feature on many group life insurance plans. This welcome option provides anyone with the added comfort of knowing that they will not have financial worries in the event of a terminal illness. While the technical definition varies according to each particular group life insurance plan, terminal is generally defined as an incurable condition that leads to certain death in 12 months or less.

Another common variance found on many group life insurance plans is the percentage of the face value of the policy paid in the event of a terminal diagnosis. The accelerated death benefit does not pay out the face value of the policy in the event of death, but it does provide a significant proportion of the face value to cover medical expenses, make arrangements, etc. In many cases, the policy will expire when these “living benefits” are paid but there are some companies that offer plans where there is still money paid to beneficiaries even afterwards. In many cases, most group life insurance plans offered by employers have a face value that is worth up to 200% of the annual salary of the employee. This value may vary if the policy holder died while working or traveling on business, but for most part the maximum face value of a company-sponsored group health insurance plan is limited to double annual salary. Be careful to read all the options and details of the policy to make sure you choose the best coverage for your particular needs.

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