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The basics of group life insurance

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You’ve probably heard of group life insurance but it’s likely that you don’t know what the term means in its entirety. If that’s the case, don’t panic; we’ve got you covered. Keep reading to find out the basics of group life insurance and how it may benefit you.

What actually is group life insurance?

Group life insurance is a benefit that is offered most commonly by employers to their employees, but can apply to any group. With one of these policies, the insurance contract exists between the organisation and the insurance company, and the group members receive certificates detailing their coverage. It might surprise you to know that more than half of all life insurance policies is group coverage.

What are the advantages of group life insurance?

Having the opportunity to get life insurance through work provides many opportunities and several advantages over purchasing a traditional, individual policy. Some of these advantages include:

  • Increased convenience – All employees need to do to access their group life insurance is fill out some forms with their employer instead of having to go through several different quotes, compare different rates, and so on.
  • Guaranteed acceptance – In the vast majority of cases, employees are guaranteed to be accepted under a group life insurance plan. This is especially beneficial for those who have health issues and may otherwise struggle to get an individual life insurance policy that is affordable, or at all.
  • Decreased cost – Although most group life insurance plans include basic coverage only and extra coverage costs extra, the basic coverage is free so there’s really no reason not to take advantage of it. Even with the added charges, these rates are likely to be more affordable than the rates most people are offered when they purchase individual life insurance.
  • Taken straight from your pay check – Private life insurance requires you to set up a monthly direct debit or pay annually, and thus make sure you have the right amount of money in the right account at the right time. On the other hand, group life insurance is automatically deducted from your pay check, so you don’t have to worry about any of the logistics.

Should I get life insurance through my employer or a private insurer?

There’s no doubt that getting group life insurance through your employer is a good idea, particularly when it works out to cost you nothing, but there are a few disadvantages to these types of policies that are important for employees to note.

Firstly, policy options are very limited because many employers only offer one kind of group life insurance instead of anything permanent. Not only this, but group life insurance policies usually only include a limited amount of cover for free, meaning it might be easier for some individuals to buy separate individual policies. Considering the amount of life insurance you specifically need is a good way to help you decide what the best option is for you.

Additionally, group life insurance policies commonly end when an individual leaves a company so if you’re not expecting to stay with the same employer for a long time, it might be easier for you to purchase your own policy instead.

And there you have it – all the basics you need to know about group life insurance!

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