Who Is Eligible for Group Life Insurance?

Key Takeaway

While many policyholders can acquire a group life insurance policy through their employer, it’s also possible to receive group life insurance via professional organization memberships or credit unions. Group life insurance can be an affordable option for term life insurance.

Group Term Life Insurance Work From Home

Group Life Insurance: Defined

If you’re hunting for the best universal life insurance, you should know group life insurance fits into a different category. Whole life insurance for disability and universal life nonforfeiture options fall under the category of permanent life insurance, meaning the policies don’t typically reach their maturity date during the policyholder’s lifetime.

Group life insurance, however, is typically a form of term life insurance Group term life insurance can be a more cost-effective life insurance product. In some cases, the premiums for this insurance can even be paid by the policyholder for certain employees or members. Usually, members of a group life insurance policy do not need to submit a medical exam and are typically not subject to individual underwriting up to a specified amount.

How it Works

Group life insurance is a single contract for life insurance coverage that extends to an entire group of people, usually employees at a company or members of a professional organization. The entity that purchases the policy may do so through an insurer on a group basis for its members. At this group rate, companies may be able to provide their employees/members life insurance at a much lower rate than an individual policy.

This doesn’t mean all members under the policy need to have the exact same terms. In some cases, members can choose to take additional or more advanced coverage alongside the coverage offered by their employer or organization. This may mean those individuals pay a slightly higher premium. Premium payments for employer group coverage are generally deducted from the insured’s paycheck.

Who Is Eligible?

These insurance products come with their own conditions. Depending on the organization, some group members must either participate in the organization or be employed by the organization working a specified number of hours for a certain period of time before they are granted coverage.

Coverage typically only lasts as long as the person is part of the group or employer. Once they leave the organization‒for any reason–the coverage ends generally ends. However, group policies are required to have a conversion option allowing insureds to obtain an individual policy when the group policy coverage terminates without providing any evidence of insurability.

The Benefits and Drawbacks of Group Life Insurance

If you recently joined an organization and are weighing the pros and cons between an individual life insurance product and a group life insurance product, here are a few things to consider:

The Pros of Group Life Insurance

Group life insurance tends to be a more affordable life insurance option when compared to individual life insurance. This is because the risk is spread across all the members of the group as opposed to just you. Your employer or group typically includes this coverage as a part of their benefits package and may pay all or part of your monthly premiums. Typically, if you are responsible for some or all of the premium, it is deducted directly from your paycheck, which can help ensure your coverage won’t lapse.

Additionally, this can be a great way to have life insurance if you have a preexisting condition. Because there is no need to submit a medical evaluation or medical underwriting, you usually are approved as soon as your group or employer approves your eligibility based on their own requirements. These requirements usually don’t involve your medical history up to a specified amount. Additional coverage above this amount may be offered which would require medical underwriting.

The Cons of Group Life Insurance

Because this is a form of term life insurance purchased and potentially paid for by an employer or organization, these policies tend to have lower death benefits. This is because these policies usually only include basic coverages, which means it may not necessarily fulfill the individual needs of the policyholders. However, some group life policies may include the option to purchase additional coverage.

Another downside is that your life insurance is directly tied to your employment or membership with a specific organization. If the organization terminates the group life insurance or you are laid off, fired, or quit, your coverage ends. However, group policies are required to have a conversion option allowing insureds to obtain an individual policy when the group policy coverage terminates without providing any evidence of insurability.

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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.

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