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The Lowdown on Group Life Insurance


Group life insurance coverage is an optional offering that employers are encouraged to provide for their employees. Unlike individual policies, these predominantly employer-sponsored plans often don’t require that applicants pass a physical exam. Group life insurance is also fairly easy to convert to individual ones when an employee leaves.

Group life insurance is often provided as part of a complete employee benefit package, which in most cases, costs far less than what an individual would pay for similar protection coverage. Because of its relative cost-effectiveness, employees who are offered group life coverage by their employer are often encouraged to take it, especially if the employee doesn’t have any other life insurance or if the latter’s coverage is inadequate.

As policy owners, employers or any related entities keep the actual insurance policy, also known as the master contract. Everyone covered by the policy typically receives a certificate of insurance that serves as proof of the coverage, but this certificate is not the policy itself.

Group term is the most common type. With this, the employer-company can protect its employees against death or total and permanent disability (PTD) by providing employees and their families a sum of cash benefit when they need it most. The amount of the coverage is usually equal to one or two times the employee’s annual salary, and as the policy is handed through the employer, the latter usually pays for most (and in some cases, all) of the premiums.


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