What Is Group Term Life Insurance?
Group term life insurance is a type of term life insurance that is offered to all members of a certain group, such as employees of a company or members of an organization. The insurance is provided at a group rate, which is typically cheaper than purchasing the same coverage individually. The organization offering the insurance generally pays all or part of the premiums for a certain amount of coverage.
|Cheaper rates than individual policies||May not offer enough coverage for individuals with dependents|
|May be one of the employee benefits||May not be portable if leaving the group|
|May be able to purchase additional insurance at the group rate||May not be customizable to individual needs|
Group term life insurance has both benefits and downsides to consider when determining which type of life insurance might be right for you. If you’re single and no one depends on you financially, or if you’re approaching retirement with a paid-off home and a healthy retirement fund to provide for your spouse, you may not need life insurance. However, if loved ones rely on you financially, life insurance helps ensure they’re provided for if you die. Without life insurance, losing your income could leave a huge hole in your family’s finances, making it hard for your spouse to pay the mortgage or send the children to college.
For most people, group term life insurance is just one component in an overall life insurance plan. You can supplement it with other coverage, such as individual policies that provide more coverage or offer more customizable options. Additionally, when applying for additional group term life insurance or an individual life insurance policy, insurance companies in many states check credit-based insurance scores before issuing coverage. Low scores could mean higher premiums, so it’s important to check your credit report and score before applying for life insurance to see if you need to improve your credit.