Group Term Life Insurance 101

Group term life insurance is a type of policy that most companies purchase and gives to their employees. The insurance plan is included in the staff’s monetary benefits. Normally, the firms do not seek either any effort or opinion from their personnel regarding the purchasing of such policy since the first will shoulder most of the premiums. Since it is term life, the plan is expected to expire upon the retirement of the policy holder, which is usually at the time they reach 65. It is important that the employees also know about this matter as it concerns them. This article covers all you need to know about group term life insurance and how it can benefit both parties.

• Who can benefit from the plan? –primarily, the employee’s beneficiary will be the recipient of the monetary death benefit upon the policy owner’s death provided that the coverage is still in effect. The money can be allotted for the burial and funeral expenses or other things that they deem fit. However, if the employee chose to opt for the Dependent term life insurance, the first will receive the lump sum payment when one of his dependents meets an untimely demise.

• Why do companies choose such a policy? –This is because it is an affordable term life insurance plan that the firms can purchase for their employees. This is their way of drawing personnel and making them stay for long and still being able to minimize their costs. Since it is included in the benefits package, the staffs would feel more secure with the company. It is more likely that there will be less turnover rates if the firm can come up with a plan that has higher face value. Generally, corporations can purchase a policy that costs as much as $200,000.

• Does group term life insurance have varieties as well? –Like other term life plans, it has variations. One of which is voluntary group term. It grants the staffs the right to decide whether to buy supplementary plans for themselves and/or for their dependents. The payment will not be shouldered by the company of course but since the plans is availed together with a cluster of policies, the primary benefit the staff can have is lower premiums. Another is employee accidental death benefits. This is an addition to the primary term life plan and granted only to those who holds a position that entail hazardous tasks.

• Will it require a medical exam? –More often than not, no medical life insurance

is the same with group term life insurance as the employees do not have to undergo a medical exam in order to qualify for that plan; neither will they be asked medical questions. All they have to do is fill out the essential application forms. The carriers will not deem this transaction too risky as prior to hiring the employees; they are already subjected to a health check up by the company they will be working for. It is unlikely that an applicant will be hired if he is not physically fit for the position.

• Who will pay for the premiums? –most of the premiums are paid by the company. However, at times, a small percentage will have to be shouldered by the employees. The payments are normally deducted to their monthly wages. The amount to be collected will differ depending on the type of policy that the employer chose or on how many insurance plans the employee purchased. Naturally, if the staff bought several policies, higher premiums will be collected from him.

• What happens to the plan when the employee resigns? –When the employee resigns or gets terminated, it will be upon his discretion whether to continue paying the premiums. Should he decides to do so, he should ask his carrier if he has the option to consolidate all his existing insurance plans including the one from his former company and ask for a life insurance quote so that he would know how much he would pay. This way, he would be able to save on the premiums and no money will be wasted.

Choosing the carrier to employ will be the responsibility of the companies. Purchasing policies in bulk does not differ much with buying a single one. However, since it involves more money, the firms should practice greater caution. Even if the premiums are non-taxable, it will just go to waste if the employers will be transacting with a hoaxer.

Article by David Livingston of EQuote, who is a specialist in everything life insurance. For more information on term insurance and seguros de vida usa, visit his site today.