What Is Group Universal Life Insurance?

Whether you’re an employer looking for benefits to offer employees or a professional association looking to offer more perks to members, knowing how life insurance works in regards to group policies can help you make the most informed decision.

From exploring the benefits of universal index life (IUL) insurance to options regarding whole life insurance rates for smokers, we always recommend you discuss your specific insurance needs with a licensed insurance agent to find what’s right for you.

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.

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.

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.

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.