GROUP LIFE INSURANCE
There are three types of Group Life Insurance: Term Life, Universal Life and Variable Universal Life.
We’ll cover the most common type of group life insurance policy offered to employees and that is Term Life Insurance.
Term Life Insurance provides coverage for a certain period of time or a specified “term” of years. If the insured dies during the time period specified in the policy and the policy is active, or in force, a death benefit will be paid to named Beneficiaries.
A term insurance policy is initially much less expensive when compared to “permanent” Life Insurance. Unlike most types of permanent insurance, term insurance has no cash value. In other words, the only value is the guaranteed death benefit that would be paid from the policy.
Group Term Life Itself Has Three Types
BASIC TERM LIFE
This is the most typical coverage, providing basic coverage and often paid for by the employer. The premiums (up to $50,000) paid for by the employer are considered to be an employee income tax-free benefit.
SUPPLEMENTAL TERM LIFE
Often offered by employers in conjunction with a basic group term life policy, this type of coverage provides the flexibility for the employee to purchase additional amounts of coverage. The employee chooses the type and amount of coverage to suit personal needs and circumstances and pays the cost for the premiums.
PORTABLE TERM LIFE
Employees who lose the employer’s group eligibility (they either leave the group or retire) can take this coverage with them to continue their insurance protection generally until they reach age 70. They make their payments directly to the insurer, many times through electronic funds transfers.
Group term coverage is generally inexpensive, especially for younger people, and participants may not be required to go through underwriting as all eligible employees are automatically covered. However, unlike individual term insurance plans, which typically lock in a rate for 20 to 30 years, most group plans have rate bands in which the cost of insurance automatically goes up in increments by age band example, 30s, 40s, 50s, etc…
ACCIDENTAL DEATH AND DISMEMBERMENT (AD&D)
What Is Accidental Death and Dismemberment (AD&D) Insurance?
Accidental death and dismemberment (AD&D) insurance is insurance—usually added as a rider to a health insurance or life insurance policy—that covers the unintentional death or dismemberment of the insured. Dismemberment includes the loss—or the loss of use—of body parts or functions (e.g., limbs, speech, eyesight, and hearing).
Because of coverage limitations, prospective buyers should carefully read the terms of the policy. For instance, AD&D insurance is limited and generally covers unlikely events. Also, it is supplemental form life insurance and not a substitute for term life insurance.