What advantages do employees have with a group life insurance plan?

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Asked September 10, 2012

1 Answer


Group life insurance is typically offered through the employer. Unlike individual policies, group life insurance is usually for relatively small amounts, such as $100,000, and come at reasonable rates based on the power of group purchasing. There are quite a few advantages of a group life insurance plan to the employee, ranging from easy qualifying to low premiums.

One of the main advantages of group life insurance is that you cannot be turned down due to preexisting conditions. For some people, such as those suffering from asthma or diabetes or other medical conditions, group life insurance is the only way to get life insurance. Because of the power of group purchasing, pre-existing conditions for some employees are mitigated by the group as a whole, making insurance available and keeping the costs reasonable.

The reason group life insurance costs are reasonable is twofold. First, the rates are naturally low because of the number of people contributing to the group life insurance plan, which alters the risks for the insurance companies. Because the group plan will never pay out to all members, insurance companies can offer lower rates because the risks of payouts are lower as well.

In most situations, group health insurance will be sufficient, and in some cases, such as where preexisting conditions are concerned, purchasing a group health insurance policy may be you only alternative. Research the company you are considering using for your insurance before you sign the policy application, thoroughly, including investigating the number of complaints the company has received with the Better Business Bureau and how well they are rated with a company such as the A.M. Best Company, a financial ratings organization. You can find ratings and reviews for life insurance companies here.

Answered September 10, 2012 by Anonymous

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