My company offers life insurance. Can you explain how this type of coverage works?
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Asked April 25, 2015
Employers offer a range of benefits packages to attract and retain employees. These benefits might include paid vacation time, health insurance, and life insurance, among others. Where insurance is offered, the coverage is typically group coverage, which lowers the cost of insurance by spreading the cost of coverage over a larger number of participants. The employer may pay some or all of the premiums, or may increase the level of employer participation based on length of service, job performance, or other factors.
Group life insurance policies are generally written for standard coverage amounts, such as $100,000. The employee names their own beneficiaries, and may name any person, object, animal or organization, or even a combination thereof. The premium payments are deducted from the paycheck before taxation, although some types of group life insurance may have taxable cash values based on employee participation values.
Employer sponsored life insurance is less expensive than individual life insurance, but may not be cheaper than purchasing a life insurance policy through some other group offering. If the employer pays a portion of the premiums, you would be responsible for paying full premiums through another source. To find out whether you can get less expensive life insurance, fill out the form on this website to get a free online health insurance quote. Because the website acts as an independent agent, they are able to compare rates from several different insurers, and that could mean saving you a lot of money over a single dedicated employee life insurance offering.
If you have an employee life insurance policy in place and leave your employer, you will have the option of terminating the policy or converting it to an individual policy. Terminating the policy would allow you to recoup the cash value, if any; the policy has accumulated, while converting the policy allows you to retain the use of your paid premiums. The conversion will have fees that have to be paid, but it is the only way to preserve the investment you have already made into life insurance.
Answered May 4, 2015 by Anonymous