What Is Group Universal Life Insurance?

Key Takeaway

Group universal life insurance policies are usually offered to a group of people at a reduced cost, compared to individual policies. Employers typically offer group life insurance as a benefit for employees. These policies come with a savings component called a cash value account, which can accumulate in a guaranteed account with a fixed interest rate.

Group universal life insurance graph

Group Universal Life Insurance: Explained

Group universal life insurance policies typically act very similarly to individual universal life insurance policies. A key difference here is that group universal life insurance is typically a singular contract that applies to a group of people at group rates, compared to individual policies. With group universal life insurance, each insured party generally has permanent life insurance coverage with a cash value account to potentially grow their savings.

Some organizations that may purchase group universal life insurance include:

  • Employers 
  • Churches 
  • Professional associations 
  • Alumni associations 
  • Unions 
  • Other affiliate groups 

Group universal life insurance can help provide employees or members with a sense of security for their families in the event that the insured passes away. This can make it an attractive benefit to add to a benefits package if your organization wants to attract more employees or members. It can demonstrate to applicants that your organization values the wellbeing of members or employees.

How They Work

These policies can sometimes be extended to the spouses or immediate family members of the insured. Just like with individual policies, group universal life insurance offers a death benefit that pays out to the insured’s beneficiaries in the event of the insured’s passing. Universal life insurance‒group or individual‒typically comes with a savings component.

So, how does it work? Policyholders will usually choose a coverage amount that starts with the amount of their base salary. (They may have the option to increase this amount for an additional premium.) The amount they decide on will be the amount paid to their beneficiaries when they pass, as long as the premiums are paid.

There are also situations where employers or organizations choose to cover the entirety of their employees’ or members’ premium costs as an additionalperk. Some will choose to split that cost with the members or employees via pre-tax payroll deductions. Regardless, the cost of coverage is usually lower than that of an individual policy.

Key Considerations

It’s important to note that there are some key factors to consider with group universal life insurance. For example, employees may lose coverage if they switch companies or quit their jobs. 

Additionally, group universal policies typically don’t receive dividends. They may also not have access to any accumulated cash value, as they may with an individual policy.

The Bottom Line

Group universal life insurance can provide many of the benefits of an individual universal life policy rates that are usually much lower. However, the policyholder’s coverage is contingent on them paying their monthly premiums and their continued employment or membership that provides the group coverage.

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The information above is for educational use only and does not represent insurance, tax or legal advice. It is not a recommendation or solicitation to buy insurance. Please talk to your licensed insurance agent for more information about life insurance and your needs. Please consult with the appropriate professional for tax or legal advice. Guarantees are backed by the claims-paying ability of the issuing insurance company. 

Article Author: Meredith Bell
Author Bio: Meredith joined Everly in 2022 and has 20+ years of experience in the life insurance industry. She has held various roles in advertising, marketing, communications, sales and distribution support, and product development. Outside of the office, Meredith lives with her daughter Kennedy and their dog Mavis. Meredith enjoys cooking, camping, gardening, hiking, and bourbon (though not always at the same time). She is a live music enthusiast and an avid reader. Her favorite quote is by Thomas Jefferson: "I cannot live without books." Meredith agrees, but would add cheese, movies, and dogs to that list.

Policies are issued by Everly Life Insurance Company (“Everly Life”), Topeka, KS. Everly Life is not licensed in the state of New York and does not solicit or transact business in New York.

A.M. Best's 15 ratings are a measure of claims-paying ability and range from A++ (Superior) to F (in Liquidation). Ratings are current as of January 25, 2024 and subject to change at any time. While ratings can be objective indicators of an insurance company's financial strength and can provide a relative measure to help select among insurance companies, they are not guarantees of the future financial strength and/or claims-paying ability of a company and do not apply to any underlying variable portfolios. The insurance agency from which a policy is purchased, and any affiliates of those entities, make no representations regarding the quality of the analysis conducted by the rating agencies. The rating agencies are not affiliated with the above-mentioned entities, nor are these entities involved in any rating agency's analysis of the insurance companies.

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