Employer-Provided Group Life Insurance and Its Benefits

Employer-Provided Group Life Insurance and Its Benefits

Life insurance offered by an employer to its employees is group life insurance. Employer-provided group life insurance has its benefits for employers since it is an attractive part of a benefits package to court talent into their company. Since its premiums typically are paid for by the employer it is also a benefit for employees.

When an employer purchases this type of group life insurance coverage, an insurance provider does offer it on a “wholesale” basis. So the employer is getting a deal for “buying in bulk.” Coverage for each employee costs much less than if the individual purchased a policy outright on their own.

Those receiving coverage most times will not have to pay anything “out-of-pocket” for policy premiums since it is given to them in a benefits package. Other employers do ask for the employee to fund their part in the premium. Employees may elect to have their premium payment deducted from their paycheck each pay period.

Group life insurance coverage has many benefits to attract the employer to offer such a benefit to its employees. Highlights of them include:

Employer Benefits:

· Federal income tax deductible premiums

· Desirable fringe benefit offered to new employees

· Reduced turnover, saving your money in hiring and training costs

· Contributes to employee security and higher morale

· Rates tend to be lower

Group life insurance coverage also has its benefits for the employee, as well. Highlights of them include:

Employee Benefits:

· Employees can easily select and change beneficiaries

· Waiver of Premium disability rider may also be available

· Some policies may offer optional features such as accidental with options for childcare and education

· Some plans offer will and estate planning

Many group plans allow an increase in coverage following a family status change. Oftentimes there will be a certain amount you may increase by answering questions about your health or having a medical exam. Sometimes increases in coverage are automatic, as when you receive an increase in salary.

Generally, if used, the insurance plan provides your family with a lump sum payment in the event of your death. The master policyholder is the employer.

If you terminate your employment, check with the insurer of the group life insurance policy to see if you have the option to convert your existing coverage to an individual policy.

This is a worthy tip since often times conversion can be done without proving insurability. In other words, without showing your health status, lifestyle, or family health history for underwriting purposes to get the coverage transferred into an individual policy for yourself.


Want to learn more about life insurance? Read our article The Most Frequently Asked Life Insurance Questions.

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