Group Life Insurance - What's the deal?

I meet many people who have life insurance through work and think that they don’t need any more. While I personally disagree as I think the cons of group life outweigh the pros, I want you to know the differences.

41% of consumers agree they need life insurance or more coverage.

Group (Employer) Basic Life insurance

Pros:

• Employer-sponsored benefit is often provided at no cost to the employee and typically includes a set amount of coverage, such as one or two times the employee's annual salary.
• It ensures employees have at least a minimal level of life insurance coverage without having to undergo medical exams or answer health-related questions. This can be particularly beneficial for individuals who may have pre-existing health conditions that could otherwise make obtaining life insurance difficult or expensive.
• You may have the option to purchase supplemental coverage at competitive group rates.

27% of adults lost their life insurance coverage in 2020 due to an unplanned loss of employment.

Cons:

• Lack of customization, as these policies are typically designed to meet the general needs of a group rather than individual preferences. This means that the coverage might not be tailored to your specific circumstances or provide the exact benefits you require.
• Often tied to your employment, so if you change jobs or lose your job, you may lose your coverage. This can leave you vulnerable during periods of transition.
• Coverage amounts can be limited, which might not be sufficient for your needs, especially if you have significant financial obligations or dependents.
• Group life insurance can be a cost-effective solution, it might not be the cheapest option if you are young and healthy, as individual policies can sometimes offer better rates for those demographics.
• Work-Related Restrictions—Coverage typically requires “active” working status. If you become ill and unemployed before dying, the insurance may not pay.

4.1 years is the average number of years employees have been with their current employer.

Employers will also often offer supplemental term life insurance as an added benefit. This can be bought on top of the basic. While it can be easy to enroll, there are often more disadvantages. The rates are going to be blended, so the healthy and unhealthy will likely have the same rate since it's a group with limited underwriting. This is also not portable; you will likely have increased premiums each year, and it is very basic. Another reason to get your own policy through an independent broker.

You can reach out to The Life Lady for a free review and consultation of your life insurance needs.