Group Life Insurance Covers: Gains And Pains | SupportBiz


Group Life Insurance Covers: Gains And Pains

Tags: Insurance
Group insurance policy has its own positives and negatives, but it is advisable to invest in a policy which will provide you with a cover in case you leave your job.

SB News Bureau

A life insurance policy will protect your family from financial stress in case of a medical emergency or an accident. The insurance cover will provide financial security to your family in your absence and will ensure that they do not get the burden of debt. In contrast, a group insurance cover is a policy that provides coverage for many people who are not related to each other. It is like an insurance policy arranged by employers when they offer insurance cover to the employees. When you have a group insurance policy, there is no specific term for a few years. Instead, you get the cover for as long as you are working with an employer. From the time you cease working with the employer, you will no longer enjoy the benefits under the group insurance policy.

Benefits of group life insurance

  • The policy sponsor or your employer will arrange the coverage limit, the rate and the terms of the policy. You only decide the amount of coverage you would like to receive upon your death.
  • In most cases, there is no requirement of a medical examination. Sometimes, insurance companies use a health questionnaire where they ask details about the pre-medical condition and current health of the individuals.
  • If you have pre-medical conditions, it is possible for you to get a group term life insurance policy which you might have trouble getting as an individual applicant.
  • The process of health screening could be less time consuming than the medical review you would have to go through if you applied for an individual policy.
  • In case of a group insurance policy, the cost is lower than if you obtained the same cover for an individual policy. You will be able to obtain a higher coverage at a lower cost.
  • You can purchase supplemental coverage for a stay at home spouse.

Disadvantages of group life insurance

  • There is zero portability in case of a group life insurance cover. If you leave the employer, your coverage ends. It can increase the financial vulnerability of your family if you do not have any other kind of life insurance. You will remain entirely dependent on your employer for your coverage.
  • There is no possibility of diversification of the insurance coverage. You do not have the choice of a rider or a carrier.
  • You have no control over your individual coverage. Your sponsor decides the terms of the policy and you only must abide by it.
  • Healthier individuals will have to pay the same premium as that of individuals who are on the higher risk side of the policy.
  • You might need additional coverage to compensate for the coverage that your group life insurance doesn’t have.
  • It does not help you directly.

You need to consider your financial requirement when buying an insurance policy. Make sure you understand the terms and conditions of the policy before you make a final decision.  Group insurance policy has its own positives and negatives, but it is advisable to invest in a policy which will provide you with a cover in case you leave your job. The group insurance cover will leave you entirely dependent on your employee, and the sponsor will determine your terms and rate. It is not cost-effective in the long run since every employee will be paying the same amount of premium, irrespective of their medical health and condition. Even if a group insurance policy covers you, you need to ensure that you have a cover for yourself and your spouse. You can choose to invest in a basic term plan that will protect you for a specific period. In case you leave the job, you will still have cover under the plan. In case of group insurance, you get no choice about the policy you want to invest in or the rider you wish to purchase for yourself. You will have to accept the policy chosen by your sponsor and merely pay the premium amount on the same. It does not have any direct benefits to the employee. Many employers purchase a policy because they must abide by the state laws and invest into a policy to provide a cover for the employees. With an individual policy, there is a broader choice and an option to customise your plan.