Group life insurance is an insurance coverage commonly offered by an employer or union. This form of life insurance costs little or nothing to the employees to sign up. Group life insurance ensures that the dependents of an employee are well taken care of in the event that something happens to him or her.
Advantages of a group life insurance
- It is easy and convenient
Group life insurance is ideal for those who want life insurance but are too busy to shop around for a good deal. Your employer does all the major work of comparing and getting the best life insurance rates. All you simply need to do as an employee is to sign up. Or in some cases, you are automatically enrolled by your employer into the life insurance scheme.
- Anyone can qualify
Many life insurance companies typically refuse to accept people with serious medical conditions. The reason is that these sets of people are too risky and will cost the insurance companies a lot of money in the future. But with group life insurance, everyone is eligible to apply. In fact, you are not given a medical checkup. All you simply need to do to qualify is to fill out a questionnaire.
Disadvantages of group life insurance
- It is limited to an employer
Your group life insurance is only valid just as long as you are still with your employer. But if you decide to leave for another company, your life insurance coverage ends immediately. However, you could decide to convert your group life insurance into individual life insurance when you are leaving. But the problem with this option is that it costs a lot of money.
- It has a small coverage amount
Group life insurance is not enough to cover your family’s long term financial needs. If an untimely death were to happen to you, the amount that will be paid will be one or two times your yearly salary.