Have you ever heard of life settlement investments? what is a life settlement investment ? well it is very similar to something like selling your insurance policy to a third-party on the payment done for one time. here are the pros and cons stated of it. For now let us take a look at group life insurance. Group life insurance is a confusing and complex topic for many people that don’t have their ear to the ground in the life insurance industry (in other words, most people!). For most people stumbling onto this page, group life insurance is not something you would apply for as this is a class of policy that employers take out in order to offer coverage to their employees (that’s why you may see it listed as institutional, business wholesale life insurance on some other sites).
And if you suspect or know that your company offers group life you should chat with your HR rep about plans and pricing. If you’re interested in finding a policy that covers more than one person, you probably want to take a look at joint life insurance (many people looking for joint life initially confuse it with group life).
Group Life Insurance Definition
Whether we’re talking about group term life insurance or any other type, it’s pretty much the same story: an employer or other large group (including non-profit organizations and even churches) decide to team up with an insurer to get a group rate. As you might imagine, the type of discount you’d see on a policy covering 1000+ people can get mighty large! You can learn more about how it works here.
One important difference between group life insurance and “normal” insurance is the fact that each person under the policy isn’t checked for health, age etc. by the insurer’s underwriter. As you might imagine, for a very large corporations, doing medical exams for every employee would be a real pain! Instead, they focus on the ability of the company to pay their premiums every month.
So if you’re a bit older or in ill-health, you should definitely look into your employer’s life insurance plans and see if there is a group policy available to you. Oftentimes, with the group policy discount and the lack of a medical exam you can save a bundle vs. going at it alone. The only downside of this approach is the fact that you can’t compare one group life insurance policy with another. That’s because there’s typically a contract between the company and the insurer that excludes other insurers from getting involved. So if you suspect the group rates seem a bit high feel free to shop around and see if you can get a lower rate on your own (keeping in mind, of course, that the coverages and terms of both policies need to be about equal to make a fair comparison).
And as you may expect, your rates depend on the nature of your profession and the average risk that an employee carries. In other words, a company that spends their days sewing sweaters would likely receive significantly lower rates than a company chock full of professional parachute experts. This .pdf can see an example of how rates are calculated.
Another bonus of group life insurance is that you can often maintain your benefits after you retire. Considering how much pay checks can get stretched during retirement — and the fact that life insurance becomes more important as you get older — having an essentially free life insurance policy is an amazing bonus that many large companies provide to their employees.
Many people ask: “Should I consider group life insurance if I’m already covered?”. While there’s no straightforward answer to that, it’s definitely something to consider. Two life insurance policies gives you twice the coverage (more or less) than a single policy. And if you have a particularly cheap policy with a low payout a group life insurance policy may be a great way to beef up your death benefits.