Group Life Insurance
Many people have group life insurance that they can get from their employer, but
is it enough to protect their families’ needs? Your group life insurance might be a
good solution or at least a good starting point to supplement your families’ plan
of protection. Here are some of the details of group life insurance
policies/certificates and why they are a great benefit for employees. We will also
look at some of the limitations of group life insurance and why you need to look
at buying your own policy.
So, let’s talk about individual life insurance policies here. They are really the other
option and are typically a good way to supplement the group coverage from your
Buying Group Life Insurance
Group life insurance is a benefit that many employers make part of their benefits
package for their employees. This benefit can be purchased as part of a package
of benefits or as a stand-alone benefit. Usually you will be eligible for this benefit
when the plan is started or when an employee first joins the employer There is
often a base benefit that all employees will receive. Plans will sometimes offer an
annual enrollment period.
There is usually also an option to buy up additional coverage for you and possible
your family on a guaranteed basis. This will allow you to buy a limited amount of
additional coverage up to a certain limit. There are usually no or limited questions
about your health. This can be very beneficial if you have health issues and cannot
qualify for an individual policy.
The issue of everyone being able to buy up additional has an upside and a
downside too. This is great if you aren’t healthy, have a chronic disease or are a
smoker. These are conditions that traditional Life Insurance companies don’t
necessarily like because you are much more likely to die at a younger age.
The limited questions being asked of employees enrolling in the group life insurance
plans make the easy to qualify for. For some people that might not otherwise be
able to get coverage, this is a great option.
Group Life Insurance can also be a basic amount of coverage that employers often
provide to their employees. Being that group life insurance is often given at no
cost to employees, it is a great base level benefit.
If you have been turned down or you know that you can’t qualify for an individual
life insurance policy, get as much group life insurance as you need or they will
If you have any questions about your being healthy enough to qualify for an
individual policy, then let’s talk and we can see if an additional life insurance
policy is right for you.
If you are healthy and want to protect your family and loved ones, then look into
getting an individual life insurance policy. You can get more coverage, often with
better benefits and features, at a better rate and you will own the policy.
I do not offer tax advice, but if you pay for your group life insurance with pre-tax
dollars the benefit will be taxed.
Your beneficiary will receive a check from a life insurance settlement and then
receive a 1099 for the payment at the end of the year, as it was a benefit from the
employer or Union. So since the group life insurance was not paid for by the
insured, it was fully taxable.
You can often not get enough group life insurance to protect your family
adequately. I hear guys joke about “I don’t want to leave them rich”, but do you
want to leave them poor and destitute?
Group Life Insurance will usually be based on multiples of your salary. This is
never going to be enough to allow your kids to stay in their house or go to the
schools you would want them to.