If you recently got a new job, or if it’s open enrollment season, you might have a chance to get life insurance through your employer at little or no cost to you. Show
But is group life insurance a good idea? Here is a rundown of the advantages and disadvantages of getting coverage through work. TAKE CARE OF WHAT MATTERS MOST Your family is unique — your life insurance should be, too. What is group life insurance?Many employers offer free life insurance as a benefit. These employer-provided life insurance policies are sometimes referred to as basic group life. More Americans are covered by these workplace plans than individual plans, according to a 2017 study by the Life Insurance Marketing and Research Association, better known as LIMRA. Coverage amounts are typically low, often ranging from $25,000 to a multiple of your annual salary. Coverage is generally guaranteed, which means you don’t need to take a medical exam or answer health questions to qualify. Because basic life policies are free and coverage is typically guaranteed, there’s no reason not to accept it. All you have to do is sign up, and sometimes enrollment is automatic. Fill out any required forms by the deadline provided, and make sure you name a life insurance beneficiary. Otherwise, the death benefit will automatically go to your estate, spouse or other relatives as determined by law. Supplemental group life insuranceThe amount of coverage available varies among companies, but can reach $500,000 or five times your annual salary. The higher amounts mean you may have to fill out a health questionnaire. The results are used to calculate your rates and eligibility for coverage. Pros and cons of buying life insurance through workHere are three main advantages of getting group life insurance through your employer:
However, depending on your needs and long-term career plans, getting group life insurance through your employer may not be the best option. Here are three disadvantages to getting coverage at work:
How to decide if group term life insurance is right for youThe first thing to do is to take advantage of any free basic group life insurance offered. Next, compare the cost of supplemental life insurance available through your work to what you can find on your own. You can use NerdWallet’s life insurance comparison tool to get life insurance quotes without entering any personally identifying information. If you can get a comparable deal on your own, buying supplemental coverage through work may not be worthwhile. Even if the cost of an individual policy is slightly higher, it's still probably a better bet because of its portability. Figure out how much life insurance you need by using online calculators or talking with a fee-only financial advisor. If you need a substantial amount of coverage, consider buying an individual policy alongside the free group life insurance you receive through work. If you fear you won’t qualify for competitively priced policies as an individual, perhaps due to a pre-existing condition, group life insurance through your work may be a good idea. Just remember the limitations, especially if you don’t expect to stay at the employer for a long time. What are the advantages of receiving group insurance?Benefits of a Group Health Insurance Plan
The primary advantage of a group plan is that it spreads risk across a pool of insured individuals. This benefits the group members by keeping premiums low, and insurers can better manage risk when they have a clearer idea of who they are covering.
How does a group insurance differ from individual insurance?Health insurance provided to employees by an employer or by an association to its members is called group coverage. Health insurance you buy on your own—not through an employer or association—is called individual coverage.
Is individual or group insurance better?One major reason to consider individual health insurance vs. group health insurance is to discover which one is going to be more affordable. With group health insurance, you'll generally see that there are cost-saving benefits such as: A larger risk pool for the plan.
What is one reason employers offer group insurance?The primary reason companies offer health insurance today is for recruiting and retention purposes. That is, health insurance is a valuable form of compensation because: It is tax deductible to the business. Employees get the benefit 100% tax-free.
|