Group life insurance in 2024. A complete guide.
Group life insurance
All types of life insurance, including group life insurance, are designed to ensure your loved ones are financially protected after your death.
Employers or organizations often offer group life insurance to their employees or members. It’s an attractive incentive and an affordable insurance option with many benefits.
Whether you’re an employer or an employee looking into group life insurance, here’s everything you need to know. We will cover what it is, how it works, and its benefits.
Table of contents
- What is group life insurance?
- What is group term life insurance?
- Group term life insurance
- Group universal life insurance
- What are the different types of group life insurance?
- Group life insurance benefits
- What happens to my group life insurance coverage after I retire?
- Group life insurance cost
- Online group life insurance
What is group life insurance?
Group life insurance is life insurance that provides one single contract to cover a group of people. It’s typically offered by employers or other organizations to employees or members.
This type of insurance is usually part of an employee or member benefits package, including other insurance types, such as health insurance.
Group life insurance costs are typically subsidized by your employer and offset by group participation. This coverage is often offered for free or at an affordable price.
In most cases, the employer or organization is the policy owner. The owners carry the insurance policy, and the insured group each receives a certificate of insurance as proof of insurance.
As with all life insurance, group life insurance allows you to choose your beneficiary.
Typically, group life policy members are not subject to individual underwriting and do not require to undergo medical examinations.
It’s an accessible insurance option with the terms above. Those with pre-existing medical conditions usually struggle to qualify for individual life insurance coverage.
What is group term life insurance?
Term life insurance is a common group life insurance for employees who meet the eligibility requirements. Group term life is typically provided through renewable annual term insurance.
Typically, employers offering group term life insurance pay most of the premiums. In some cases, they will pay all the premiums and provide coverage up to two times your yearly salary.
The coverage you receive is usually void after your contract is terminated. However, you may be able to convert your group policy to an individual one when you leave your employer.
In most cases, the conversion premiums are higher than those available to individuals, so converting is not always the best choice.
This conversion option is best suited to those without other options. However, discussing your options with an agent is advisable, especially if you are unsure about what those are.
Group term life insurance
Group term life insurance lasts for a specific period before it must be renewed. Prices may fluctuate at the time of renewal depending on several variables.
Once you are included in a group policy, you will receive your coverage details. You may be asked to set up monthly payments at this stage if the policy owner doesn’t cover your premiums.
As mentioned, these premiums will usually be lower than what you would pay if you purchase an equivalent policy from the insurance company.
Group life insurance policies generally have less coverage than individual life insurance policies. Still, group coverage is cheaper than you would pay for personal protection.
Considering group term insurance is wise if you lack life insurance or have low personal coverage.
As with standard life insurance, your insurer will pay your beneficiaries in the case of death.
Group universal life insurance
This insurance coverage is designed to cover the insured’s whole lifespan, making it a form of permanent life insurance.
Group universal life is typically more expensive than other types of life insurance but allows the insured to build cash value alongside the death benefit. It offers the ability to customize premium costs and death benefits.
Variable group universal life is similar but allows the insured to increase the potential returns on the cash value portion of the policy with an investment option.
We will now cover the various other types of group life insurance.
What are the different types of group life insurance?
As noted, the main types of group life insurance are:
- Group term insurance
- Group universal life
- Variable group universal life
Along with the main types of group life insurance, you may be able to purchase supplemental life insurance from your employer to cover your needs.
Term life insurance
This type of insurance is time sensitive but offers some of the best premiums and benefits.
Term life insurance policies are designed to last for their specified duration before they must be renewed (and the rates may increase.)
Permanent life insurance
This type of insurance typically spans the insured individual’s whole life (if premiums are paid.)
Most policy types that aren’t term life insurance are forms of permanent life insurance.
Universal life insurance
As mentioned, universal life policies are designed to cover the entirety of the insured individual’s life. This type of policy allows the insured to customize their insurance plan easily.
Whole life insurance
Like universal life insurance, whole life insurance is a permanent type of insurance.
However, whole life provides consistent premiums and guaranteed cash value, while universal life offers flexible premiums and death benefits.
Mortgage life insurance
This insurance protects a surviving homeowner (and beneficiary) if their insured loved one passes away. Unlike a traditional death benefit, this insurance will pay the remainder of any mortgage loan.
Final expense life insurance
This type of insurance specifically covers some of the costs associated with death.
Final expense life insurance guarantees expenses for a funeral are taken care of without placing a financial burden on surviving family members.
Group life insurance benefits
The main benefit of group life insurance is its value, as group life members pay little or nothing.
Here are more benefits of group life insurance:
- Group insurance doesn’t require a medical exam like most individual policies.
- Coverage is guaranteed, and premiums can be deducted directly from gross earnings.
- The policy can be converted to an individual one (but may have higher premiums.)
- Some owners allow group members to purchase other affordable and accessible insurance coverage options, such as dental or health insurance.
- There is sometimes the option to add coverage for dependents.
Some of the drawbacks of group life insurance are:
- The owner controls the policy. They can increase the premium rates and prematurely terminate the contract.
- Group life policies often have only basic coverage with relatively low death benefits.
- The insurance might not be portable once you leave the organization.
Before you commit to a policy, research and compare options to ensure you get the best group life insurance.
What happens to my group life insurance coverage after I retire?
Once you leave your employer or organization, your group life insurance terminates.
Whether you’re fired, quit, change jobs, or retire, termination usually occurs immediately or after a specified period.
Group life insurance is designed for the group, not individuals, so you will leave your policy behind if you leave the company.
As mentioned, you may be able to convert your group coverage into an individual policy upon retirement. Your employer may not continue to pay these premiums.
Key takeaways
Group life insurance provides one contract to cover a group of employees or members of a company or organization.
This type of insurance is usually part of an employee or member benefits package.
Group life insurance is subsidized by an employer and offset by group participation, making it affordable or free.
As with all life insurance, group life insurance allows you to choose your beneficiary. However, unlike standard life insurance, you are not subject to individual underwriting and do not need a medical examination.
Term life insurance is a common group life insurance for employees who meet the eligibility requirements and is often provided through renewable annual term insurance.
As noted, employers offering group term life insurance pay premiums and may provide coverage up to two times your yearly salary.
Your group life insurance terminates once you leave your employer or organization, but you may be able to convert your group policy into an individual one.
Before committing to a policy, consult a qualified insurance agent to ensure you get the best group life insurance.
Group life insurance cost
The cost of your group life insurance will depend on the following factors:
- Age
- Gender
- Medical history
- Working activities of the company employees
- Average health condition and ages of employees
- Changes in law or the structure of the organization
Prices of group life may fluctuate at the time of renewal depending on several variables, including the above.
Online group life insurance
Group life insurance provides the benefits of standardized coverage to serve the needs of a group of employees, no matter the size of the company.
Having an effective benefit plan is crucial for attracting and keeping quality employees. Pitsas Insurances can offer you various group coverage options at highly competitive rates.
Group life insurance quotes
Pitsas Insurances offer you the following:
- Quick settlement of claims
- Flexible pricing plans to suit your company’s budget
- Access to the most prestigious clinics in Cyprus and abroad
- An unparalleled variety of contracts from Cypriot and International companies
To learn more about our group life insurance, see here.
To receive a hassle-free quote for group life insurance for employees, see here.
To find out more about our standard life insurance options, follow this link to our website.
Pitsas Insurances Team
Limassol, Cyprus