Group Life Insurance
Group Life Insurance can be an important part of an employee benefit package and though rates are lower, due to increased life expectancy, is often the only life insurance owned by employees, leaving their families inadequately protected.
Typical Amounts of Group Term Life Coverage:
- Flat amounts - such as $50,000 (this amount is typically free of taxes)
- Multiples of Salary - such as 2 or 3 times annual salary per employee
Frequent Features and Provisions of Group Term Life Insurance
- Lower rates
- Easy application (often only a document and census) and administration
- Guaranteed issue amounts - meaning no medical questions or exams
- Require employees be actively at work to qualify
- Additional coverage amounts for Accidental Death and Dismemberment
Typical Types of Group Life Plans:
- Group Term Life (premiums typically Employer paid but may be shared) - pays a benefit only when premiums are paid and death occurs during the term of employment, unless coverage is extended due to special contract provisions.
- Group Permanent Life (typically premiums are higher and are shared by Employee and Employer) - pays a benefit even when death of a covered person occurs after termination of employment and premium payments are continued by employee or employer.
- Voluntary Life - (premiums are payroll deducted but may be shared by Employer) - may be Term or Permanent Life and typically enrollment requires satisfactory answers to medical questions for the group in general or per employee.
Rate Factors for Group Life Insurance:
- Number of employees within the group
- Average age of employees
- Ratio of female to male (women tend to live longer so may lower rates)
- Tobacco use (may be more of a factor in Voluntary plans)
- Risk-factors associated with the job or nature of business