Group life insurance is a benefit often offered to employees as part of their compensation package when they work for a business. Like standard life insurance, it provides policyholders’ beneficiaries with death benefits if the insured individual dies.
Life Insurance Pros and Cons
But group life insurance differs from standard life insurance in many significant ways. Read on to find out the relative advantages and disadvantages of these policies.
Group Life Insurance Conditions and Requirements
Like all insurance plans, there are conditions and prerequisites to obtaining group life insurance. Some insurers require policyholders to be part of the firm for a specific minimum period before being granted coverage. For example, a particular company may require employees to go through a probationary period before signing up for a group policy that provides health and life coverage.
Understanding group life insurance is essential for EMS workers as they advance throughout their careers. Policyholders usually get coverage only for as long as they are part of the organization. If they resign or face termination, they no longer enjoy coverage or other benefits.
Benefits and Drawbacks of Group Life Insurance
One of the main advantages of group life insurance over other plans is its higher cost-to-benefit ratio. In most cases, premiums are extremely low. Some group members may not have to pay anything. They may see a deduction from their gross earnings weekly or monthly.
It is also much easier to have a qualification for group insurance. In most organizations, all employees receive coverage automatically. And unlike individual insurance plans, it isn’t necessary to undergo a medical exam to qualify.
On the downside, group life insurance usually offers only basic coverage. Even though the cost and qualifying requirements are minimal, they may not provide all the individual’s insurance requirements.
For instance, policyholders receive coverage for $20,000 to $50,000, typically representing their annual salary at most once or twice. For this reason, insurers advise group policyholders to consider these plans as a perk and augment them with more comprehensive individual policies.
Another disadvantage is that employers often have complete control over the policy. It means that premiums‒and even the availability of the plan itself‒may change based on the employer’s decisions. If the head of the company decides to terminate insurance entirely, the policyholder will no longer receive coverage.
Shifting from Group Insurance to an Individual Plan
Policyholders could usually continue paying the plan as an individual. Although this will typically entail higher premiums, the converted plan will provide more comprehensive coverage. It is usually a feasible option for individuals who wouldn’t otherwise be able to avail of insurance on their own and wouldn’t have to undergo a medical exam.
There are also instances wherein group policyholders can purchase more coverage than what is in the existing plan. Even if the additional coverage goes beyond the basic life insurance package, they still pay only the original group rate. Furthermore, this option ensures coverage continues even if the policyholder resigns or faces termination.
However, remember that, unlike the basic group insurance plan, signing up for additional coverage may require the policyholder to fill up a medical questionnaire. Even so, they still wouldn’t have to undergo a physical exam in most cases. Again, this is a feasible option for those that wouldn’t otherwise be eligible for insurance because of health issues that might disqualify them for a standard policy.
Conclusion
Signing up for group life insurance is practically a no-brainer because it often comes as part of the perks of working for an organization. Even so, it is essential to know its benefits and limitations so you can augment it with a more comprehensive policy if necessary.
About Provident Insurance Programs
With roots dating back to 1902, Provident Insurance Programs is a program administrator that serves paid and volunteer firefighters in addition to emergency medical responders with numerous custom-tailored insurance programs. We’ve also extended our expertise and experience to offer benefit plans and coverages to participant groups as well as Transportation Benefits. We are committed to continuing to provide superior customer service, and would be happy to speak with you to provide further information. Contact us via messaging or give us a call today at (855) 201-8880 to speak with one of our representatives.