Is Group Life Insurance a Good Deal?
[social_share]For some people, group life insurance may be the only means by which they can obtain an adequate life insurance plan. Such a policy can be provided by an employer, an association with whom the insured is affiliated or another group which has decided to take out a bulk plan. It can also mean the difference between paying a few extra dollars every few weeks and not being able to leave any money at all for their loved ones in the event that the person in question passes away. But while group life insurance may be the only avenue for coverage for a minority of individuals, what about those who may be able to afford supplemental insurance or an independent policy? Does it still make sense for them to exclusively retain a group life insurance plan?
Group life insurance is more likely to provide limited coverage
The majority of employer-supported life insurance plans will typically only insure each employee for $50,000 or $100,000 at the most. After reviewing the needs of one’s family and loved ones should the insured employee die, the employee may determine that their employer’s group life insurance does not provide enough coverage for their personal comfort. In this case, supplemental insurance will help them establish the protection for their friends and family that they desire.
Group life insurance is more likely to limit the number of covers provided
Whereas coverage refers to the value of the life insurance policy payout, the number of covers guaranteed under the group plan may be similarly limited. This means that some life insurance providers allow for temporary or long-term disability cover should the insured person receive an injury that puts them out of work for a while. The same cover may be applied should another member of the family fall to injury or sickness as well. Certain life insurance plans also give the insured an option for setting up an education provision for dependants or family members going back to school. Under a group plan, however, these amenities are likely to be limited, since they would inflate the cost of the insurance beyond what is desired by the employer, association or group.
Group life insurance is subject to the whims of the employer, association, or group
The features of a group life insurance policy are subject to the whims and desires of the governing body. If an employ only wants to give their customers basic life insurance coverage set at $50,000, the employees will have no choice but to accept it if they are interested in employer-sponsored group plans. In this way, members of group life insurance policies will not have a final say on their terms and conditions like they would on an independent policy.
Group life insurance vanishes if the insured leaves the group
Most often this takes the form of a group member being laid off, fired or changing jobs. No matter the scenario in which it occurs, it boils down to the fact that group life insurance will not stay with an individual policyholder if they leave the group. This is one of the biggest and most fundamental differences between a group policy and an independent policy. An independent policy will stay available to the individual regardless of a change in status with their employer or association. As long as they keep up to date on their premiums, they will not lose protection nor will their loved ones be forced to forfeit their death benefit.
