Your life insurance policy provides financial provision and peace of mind to your family after you die. While you could buy a private policy, many employers offer a group life insurance option that offers four important benefits.
Benefits of group life insurance
- Protect your dependents
As the primary provider for your family, you ensure their needs are met. What happens if you were to die, though? With life insurance, your beneficiaries receive funds that pay bills, cover cost-of-living expenses or pay for college.
- Cut your policy costs
When buying groceries, items sold in bulk are cheaper per unit than items sold in individual packages. The same principle applies to life insurance: because more people participate, insurers can offer group policies at lower premiums. Although a group life plan does not offer as much flexibility as an individual policy, group policy costs are generally cheaper, making life insurance more affordable.
- Pay the premium with ease
Participate in a group life plan offered through your employer, and enjoy easy premium payment. Typically your employer will deduct the policy premium directly from your paycheck, so you have one less bill to manage each month.
- Keep coverage through retirement, disability, or layoff (sometimes)
Although employer group plans are designed for active employees, you can sometimes keep the policy after you retire, if you become disabled, or if you are laid off. Retirees or former employees who keep coverage typically must pay the full premium or convert coverage to an individual policy, but that extra cost can be worth the peace of mind.
Talk to your human resources manager or insurance representative about the specific features of your employer’s plan. See Employer-Sponsored Group Benefits: Health, Life, and Legal Plans for more on employer group offerings, and review Understanding Insurance Policies and Their Importance to learn how policy terms can differ. If you want personal help, talk to an agent to review options for your situation.
Frequently Asked Questions
How much group life insurance do I typically get through an employer?
Employers commonly offer a basic benefit that is a multiple of salary (for example, one to two times annual pay) or a flat amount; exact amounts vary by plan.
Can I add more coverage beyond the employer's basic offering?
Many group plans let employees purchase supplemental coverage, but underwriting or evidence of insurability may be required for larger amounts.
What happens to group life coverage if I leave my job?
Some plans allow conversion to an individual policy or continuation of coverage by paying full premiums, but options and costs depend on the insurer and plan rules.
Are beneficiaries paid a lump sum?
Typically, life insurance benefits are paid as a lump sum to designated beneficiaries, though some contracts offer other settlement options.