Group life insurance is usually paid for by an employer. Unlike individual life insurance plans, the risk involved in group life insurance is spread out over a large group of people. Employers provide group life insurance coverage to their employees so that they can rest assured that their families will be taken care of if the unthinkable happens. If you rely on group life insurance for your life insurance needs, here are a few things you should know about this type of insurance coverage.
Pro: It’s Free
If you receive health insurance through your employer, chances are that you are also covered under a group life insurance plan. Group life insurance is usually provided to employees for free. As long as you remain an employee of the company that’s paying for your group life insurance, you won’t have to pay your life insurance premium.
Con: But you have to remain employed to keep your coverage
If you quit your job and want to keep your group life insurance, you will have to pay to keep the coverage active. It’s usually not worth it to keep group life insurance active once you leave the group, so most people choose to terminate their insurance if they quit or get fired.
Pro: Age doesn’t matter
When it comes to group life insurance, age doesn’t matter. Even older people can get group life insurance, so long as they work at a company that pays for their employees to receive life insurance benefits. The fact that most employees are young balances out the equation.
Con: The employer chooses the plan
You get what you pay for, or so the saying goes. Because you are not the one picking up the bill, it’s the employer that gets to decide what kind of life insurance plan you will receive. Some life insurance plans will allow your loved ones to receive a paycheck equal to your salary for many years, but other plans only cover funeral costs and related expenses. Read the fine print to find out exactly what kind of costs are covered by your group life insurance plan.
Pro: Even people with serious pre-existing health problems can get coverage
You don’t even need to see a doctor to qualify for most group life insurance plans. If you are healthy enough to work, you will qualify. Even people with heart conditions, weight problems, diabetes or a history of cancer get the same coverage as everyone else. Risk is spread out over the entire group, so healthy people help compensate for any unhealthy members of the plan.
Con: Young people can get better coverage elsewhere
If you are young and in good shape, you can get better life insurance coverage if you opt to buy an individual plan. Group life insurance coverage is often limited, compared to what is available if you can afford to pay for your life insurance premium yourself.