4 Benefits of Getting Group Life Insurance

eFinancial: Many companies include life insurance alongside other traditional policies in their benefits packages. This employer-provided life insurance, also known as group life insurance, can be used alongside an individual life policy  to help employees  protect their families. It's often free and virtually guarantees acceptance without any hassle. Plus, many employers let employees buy more coverage for cheap if they need it. Here are a few reasons employees should consider getting group life insurance through their company and some individual life policy options for those that want more coverage. 

1. Basic coverage is usually free

Basic group life insurance is often included for free in employee benefits packages. This can be a great help to employees who need some level of coverage while minimizing their costs. Even if coverage isn't free, it's usually very affordable. There typically are no medical exams involved, so the policyholder's health isn't considered when determining premiums. Plus, premiums are drawn from the employee's paycheck, making it easy for policyholders to keep up with payments and maintain their coverage.

2. Guaranteed acceptance

Group life insurance coverage rarely requires a medical exam or underwriting. This makes it possible for almost anyone to qualify for group life insurance coverage, regardless of age or health status. As a result, older employees or those with health issues can get life insurance coverage through their employer without worrying about denial.

3. Convenience

In many cases, getting group life insurance at work is part of the employee's onboarding paperwork. This makes getting the policy much easier since employees can fill out life insurance information alongside other relevant documents. Additionally, since there's usually no medical exam or underwriting required, coverage can begin a lot faster.

4. Additional coverage may be available

Sometimes, basic group life insurance may not provide certain employees enough coverage. For instance, an employee might have a baby while at the company and will want to buy more coverage to protect their new child. If an employee needs more coverage than their basic group policy provides, their employer may let them buy supplemental coverage for a low rate. This makes it possible to get adequate coverage at a great rate without getting an individual policy outside the workplace. Plus, it's easier for employees, since they don't have to manage two separate policies from inside and outside the workplace.

Should policyholders supplement group life coverage with individual life insurance?

Although group life insurance is an affordable option that works well for some, its small death benefit may not provide enough coverage for policyholders that want to give their loved ones a substantial financial cushion. Individual life insurance can be useful for policyholders who would like beneficiaries to replace their income for several years in the event of their passing. 

By supplementing a group life policy with individual life insurance, loved ones can receive a much larger payout that they can use to cover expenses long after the policyholder dies, including monthly bills, debt payments, college education, and day-to-day costs. Here are two individual life insurance options policyholders can consider:

  • Term life insurance: This is a temporary policy that can cover the policyholder for a set period of time, usually 10 to 30 years. If the policyholder passes away while the policy is active, beneficiaries will receive a guaranteed death benefit payout. Term life insurance typically comes with affordable premiums.
  • Whole life insurance: Whole life insurance is a permanent policy that offers lifetime coverage. This means that as long as the policyholder continues paying premiums, the policy will never expire. Whole life insurance also comes with a cash value component that the policyholder can access while they're living. Although whole life insurance premiums are often more costly than term life premiums, the death benefit payout is typically larger.

Get life insurance coverage through work

Group life insurance is a great way for employees to get basic coverage for virtually no cost. In addition, these policies don't require medical exams, making approval guaranteed and helping employees get coverage quickly.

All that said, employees should still compare group coverage to their total coverage needs. This will help them determine if the group life insurance policy is enough or if they need to supplement it with more workplace coverage or an individual policy outside of the company like term life and whole life insurance.

Source: eFinancial