Looking for info about Group Life Insurance? Want to know more about it?
In this article, we look at what group life insurance is and the pros and cons of these policies.
What is Group Life Insurance?
Usually, Group Life Insurance or GLI is offered by employers. It is one of the perks of being employed. Some employers choose to provide life insurance for their employees, and GLI is one of the easiest life insurance to get.
Companies offer these policies so they’re more appealing to employees. Also, they can help improve the employer-employee relationship.
GLI is easier to qualify for compared to individual life insurance policy. However, it doesn’t provide the level of coverage that one would get from a Whole Life Insurance, Universal Life Insurance, or Term Life Insurance. At best, GLI can be considered as a supplemental life insurance.
Usually, GLIs are offered to a large group of people, hence the term “Group.” In GLIs, the organization or the employer is the owner of the policy.
It is similar to term life insurance as it only provides coverage for a certain number of years. The premium for GLIs are either covered in full or in part by the employer. Sometimes, part of the premium is deducted from the employee’s salary if they choose to go for higher coverage.
If an employee suffers an untimely death, a death benefit will be paid out to their listed beneficiary.
Group Life Insurance Benefits
Now, GLIs have their own pros and cons. Let’s talk about the benefits first.
- Easy application and approval – As we mentioned above, GLIs are easy to obtain. Oftentimes, you’re guaranteed to get coverage. This is particularly beneficial to those employees who are older or in poor health.
- Employers pay for it – This type of insurance is paid for by your employer. Your coverage will be added to your salary at no cost to you.
- Supplemental life insurance – While it is still better to get individual life insurance for higher coverage, having a GLI in your portfolio is also ideal. Having some life insurance is better than not having it at all.
Group Life Insurance Disadvantages
- Not enough coverage – GLI is only a supplemental form of life insurance. It doesn’t provide the same type of coverage a typical life insurance provides.
- It’s a one-size-fits-all – With GLI, you cannot customize the death benefit amount and the term length. You also do not have authority to change policy provisions through riders.
- It’s not portable – When you quit your job, or transfer to a different company, you can’t take your GLI with you.