Having a group policy has a few advantages, compared to an individual life insurance policy. Individual life insurance policies allow you to choose the company, plan and features of that plan that makes the most sense for you and/or your family. You’ll likely need to buy this through an insurance agent or insurance broker, which means you’ll also need to pay a commission fee (sometimes called a load). This pays the agent or broker for their time spent helping you choose the right plan, for assisting with the application process and for agreeing to provide any assistance down the line to keep the policy updated.
However, there are many advantages to doing a group policy instead. Oftentimes, employees have life insurance automatically from their employer, your employer might provide additional life insurance under existing policies, or you can purchase it through your employer from a union or trade association. Here are some of the benefits of doing a group policy rather than an individual policy for life insurance.
- First, you can get a lower rate for a given death benefit. That happens because the rates are averages weighted by people younger than you or because the sponsor subsidizes the premium.
- There are no health qualifications for getting group coverage, which means you don’t need to delve into your medical history at all. It’s a massive weight off your shoulders in that regard!
- Lastly, you will not forget to make a payment because the premium is deducted from your payroll automatically each pay period or is linked to a credit card or bank account for automatic payments.
Even if you end up leaving your company, you might still find that you’re covered for life insurance. While many plans are term insurance (meaning that it’s a fixed rate of payments over a limited period of time), but depending on the state you live in, it might be a requirement that you’re able to convert your group policy over to a whole life insurance with the same company after you leave your company. Whole life insurance is an upgrade from term life insurance because it is a policy that remains in place for your entire lifetime. It’s a great added benefit to group life insurance, especially for older employees or those who are having health issues because you can qualify for whole life insurance without having to take a medical exam to see if you qualify for that type of policy.
