| Group life
insurance can be structured many ways. Most commonly,
this type of insurance is provided by an employer
to its employees. Usually, it's term insurance
(although some employers do provide permanent
insurance, for example whole life insurance) which
designates a specific amount of coverage for each
employee for a specified period of time. The employer
may pay the entire cost of the life insurance,
or perhaps share the cost with employees. While
group life insurance is typically provided to
a group of employees, it can also be used to provide
coverage for members of a union or other association.
So you may be wondering, "why not just
purchase my own life insurance policy?"
One major advantage for a group life insurance
policy is that a master policy is issued for
all employees included in the plan so instead
of each individual being evaluated for coverage,
the group as a whole is underwritten (similar
to group health insurance) which can provide
significant cost savings to the employer or
employees (depending on who is paying the premium).
An additional benefit of a group life insurance
plan is that each employee must be offered coverage.
This doesn't mean every employee must purchase
the coverage, but for those with pre-existing
conditions that have experienced problems obtaining
life insurance, the guaranteed insurability
provided with a group life plan is a fantastic
benefit.
Your next question might be, "what happens
if I change jobs or I'm terminated?"
If you find yourself in this situation, you
have a very important decision to make and unfortunately,
you only have 30 days to make this decision.
You have the option to convert to an individual
life policy without taking a physical examination.
This may not sound like a big deal, but if you
have a condition that would prevent you from
purchasing life insurance on your own, converting
to an individual policy might be your only option
to obtain life insurance coverage.
Tip. Since you have a very
limited amount of time to convert your policy,
make sure you talk with an experienced agent
as soon as you learn about your departure from
your current employer.
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