- Group life insurance is employer-provided, usually free or low cost for employees.
- You lose your coverage if you resign, retire, or are terminated.
- Compare life insurance online in minutes with Everyday Life Insurance.
About 60% of Americans have life insurance, according to the Insurance Information Institute, and a quarter of them don't believe they have enough coverage.
If you're on a fixed income, the monthly cost of life insurance premiums might worry you. However, one of the most affordable life insurance is the type your employer offers, known as group life insurance. Most employers offer some sort of group life insurance, usually equal to your salary, for free or at a low cost.
Because this insurance is sponsored by your employer, the rates are cheaper and, unlike with individual life insurance policies, acceptance is guaranteed. The drawbacks of employer-provided group life insurance are limited coverage amounts and the fact that you lose your coverage if you leave the job that provides it.
It's best to get as much life insurance as you can afford. If you have no life insurance or you cannot qualify for individual life insurance, any available employer-provided group life insurance is worth it.
What is group life insurance?
Employer-sponsored coverage
Group life insurance is not an individual plan. It is employer-provided. Therefore, you need to check with your human resources department at work to see if your employer provides coverage. If group life insurance is offered by your employer, there is usually an open enrollment period where you have to opt in or choose to waive coverage.
If you opt-in for employer-provided coverage, similar to an individual life insurance policy, you must select a coverage amount and a beneficiary for your death benefit. Most people select their spouse, partner, or trust created for a child as the beneficiary of their life insurance policy.
Check with your human resources department because your employer may have a waiting period for new employees, a set open enrollment period, or other costs unique to your situation.
Features of group life insurance
Group life insurance is a term life policy offered by employers to employees. Like a traditional term life policy, it has a death benefit, the payout your beneficiaries will receive. It doesn't offer cash value, which is money that your policy accumulates over time. Here's an overview of this policy's features:
Feature | Group life | Term life | Permanent life |
Expires? | Yes | Yes | Yes |
Death benefit? | Yes | Yes | Yes |
Cash value? | No | No | No |
Advantages and disadvantages of group life insurance
Advantages of group life
Affordable: Most employer-provided group life insurance is no-cost or low-cost for you as an employee, making it an affordable option if available through your workplace.
Convenient: Private life insurance must be bought through the insurance marketplace. Qualifying may also require a medical exam and a health questionnaire. With group life insurance, you can automatically get it through your workplace, regardless of age or health.
Guaranteed issue: Group insurance is considered a guaranteed issue, meaning all employees are accepted for life insurance.
Disadvantages of group life
Limited Coverage: A disadvantage of employer-provided group life insurance is that if you leave your job (you resign, retire, or are terminated), you lose coverage. You cannot take the coverage with you, no matter how or when you leave.
Tied to Employment: Group life insurance may not be enough as your sole coverage. The recommended life insurance death benefit is 10 times your annual income. Group insurance offers much less.
Group life insurance FAQs
Many group life insurance policies provide up to three to five times your salary. The specifics will vary by employer and provider, so check with your human resources department to find out what is offered.
You usually don't have to pay for group life insurance. But any supplement group life insurance may come at an extra fee. However, even this cost is minimal compared to an individual life insurance policy.
You typically won't be able to keep your group life insurance. Some insurers offer conversion privileges that allow you to convert to an individual policy. These conversions allow you to waive a medical exam and approval process.
You can choose your beneficiary and change it as needed. Most people select their spouse, partner, or trust created for a child as the beneficiary of their life insurance policy.
Group life insurance may not be enough as most policies offer significantly less than 10 times your salary in coverage. It may be enough to cover your end-of-life expenses but not to meet your dependents' continued financial needs.
