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Group Life Insurance: An Explanation About the Different Types

Updated: August 5, 2018

Group life insurance is a term used to describe the arrangement when one contract covers a number of people in terms of life insurance.

One party will purchase a contract for life insurance, but this coverage can extend to anywhere from half a dozen to hundreds of people.

Most group life insurance is purchased by businesses and organizations looking to provide insurance to their employees.

Group life insurance is not only a great way for businesses to give their employees benefits, but it also comes at a discount to regular policies.

Companies often pay less for group life insurance, when calculated on a per-person basis, than the individual would pay to insure themselves.

What is Group Life Insurance?

Group life insurance is an insurance arrangement where one contract is used to provide life insurance coverage for an entire group of people. The policyholders who are in charge of these contracts are usually small or medium-sized businesses, large companies, labor organizations or non-profits.

Group life insurance is popular because it is a great way to save money on insuring a number of people.

Most companies that provide group life insurance will also offer their employees other benefits, such as health insurance.

Group life insurance is popular because it is a great way to save money on insuring a number of people. The per-person cost for insuring ten people is a lot less than the amount of money those ten people would pay to by insurance individually.

Group life insurance benefits the insurance companies because they are getting a lot of business they might not necessarily receive if the contract did not exist.

For example, a number of people who receive policies through group life insurance would not necessarily purchase those policies if they had to buy them independently. This creates a win-win situation for all the parties involved in the deal.

Who Provides Group Life Insurance?

The providers of group life insurance analyzed according to the volume of insurance they provide. For example, a massive company that has offices throughout the United States might offer insurance to thousands of their employees.

The providers of group life insurance are almost always businesses or professional organizations.

In contrast, a small business owner will choose to enroll in a group insurance policy for themselves and the handful of people who work at their establishment.

The providers of group life insurance are almost always businesses or professional organizations. While it is possible for a private citizen to buy insurance for a group, it is rarely done. Businesses have a lot more to gain by offering these types of policies to their employees.

When an individual is looking for jobs in a particular field, they will assess more than the salary being offered by different companies. The benefits on offer are also very important. A company that provides group life insurance has a leg up on competitors who do not.

These companies become a more attractive proposition for individuals, because they are providing many perks in addition to the monthly salary.

How Can You Get a Group Life Insurance Policy?

The best way to get a group life insurance policy is to ask your current employer whether they have any such offerings. Some employers will offer the policy on their own dime, while others give employees a chance to join the policy at their own cost.

The rate offered by the group life policy is less than the employees would pay if they went to the same insurance company individually.

An employer that offers group life insurance, but puts the cost on the employees, is still offering these employees some benefit. The rate offered by the group life policy is less than the employees would pay if they went to the same insurance company individually.

Other employers will have a standard group life offering that every employee receives. But if some employees want added benefits or a different policy, they can pay the difference between the employer’s offerings and the policy of their choice.

If you are not happy with the lack of group life insurance offerings by your current employer, you might want to consider looking for a job at another company.

As you get older, the importance of receiving benefits at work increases substantially.

Who Sells Group Life Insurance?

Group life insurance is sold by the same companies that sell regular whole and term life insurance policy. Almost every major life insurance provider in the United States will offer group life insurance.

As is the case with whole and term life insurance, employers and organizations must think carefully before choosing a company for group life insurance.

These policies are great for insurance companies, because they provide financial value equivalent to many regular life insurance policies. For example, a group life policy with 100 participants is equivalent to selling 100 individual policies for the insurance company.

As is the case with whole and term life insurance, employers and organizations must think carefully before choosing a company for group life insurance.

Group life policies are often more complex than standard polices, because they involve insuring so many different people. This makes it even more important to go with a reputable company that has a fantastic customer service record.

The last thing a business owner wants is to spend half their time trying to figure out the specifics of their group life policy because they cannot get on the phone with anyone from the insurance company that sold them the policy!

Advantages of a Life Insurance Policy

In general, life insurance comes with enormous benefits. For the individuals who participate in the group life insurance policy, there is now the ability to provide a financial benefit for your loved ones should you pass away.

Depending on the type of policy offered by your employer, you may have a chance to get a whole life policy at a fantastic rate.

This benefit can really change the circumstances of your loved ones when you pass away. Instead of worrying about bills and how they will pay for the funeral, your loved ones can rest easy knowing their financial future is secure.

Depending on the type of policy offered by your employer, you may have a chance to get a whole life policy at a fantastic rate. This will allow you to build up the policy’s cash value over time.

It is also possible to borrow money against some whole life insurance policies.

Some group life providers will even allow individuals to switch their portion of the group life policy over to an individual policy. This is helpful for someone who may reach retirement age or want to leave their current employer, but does not want to give up the insurance policy.