What is a group life insurance policy?

Group life insurancepolicies explained

Purchasing a group policy is one way that someone can buy a life insurance policy. Group policies are traditionally available from employers, unions, trade associations, or other groups such as an automobile club or alumni association.

There are several benefits to purchasing group insurance instead of an individual policy. One benefit to purchasing life insurance through a group is ease for the consumer. All the hard work of finding the policy and selecting the benefits that work best is taken care of, and the consumer does not need to obtain a life insurance quote.

Another benefit is that group insurance is often offered at a lower rate than an equivalent individual policy, either because the group is subsidizing the insurance or the risk profile of the group is less than for the individual insured. Often health requirements are waived for anyone purchasing a group policy, as well. A benefit of group insurance purchased through an employer is that it can be paid for via a payroll deduction.

Most group insurance policies are term life insurance policies – with coverage that ends once the term of the policy is reached. However, in many states, consumers can convert the insurance to whole life insurance coverage with the same insurance company, and pay the premiums directly. If a policy is converted like this, the insured does not have to meet a health requirement or prove insurability.