Major companies with many employees working for them, have an aptitude to retain their skilled employees and recruit new people who make a considerable contribution to the profitability of the company. The company is bound to safeguard the interests and safety of the employees and hence opt for various life insurance benefits which are a key element of any employee benefit plan.
Group term life insurance ensures the financial stability of the dependents of the employees, in case of the death of the employee. It is an affordable way to provide financial security to the dependents of the employees in the event of any unfortunate happening.
Basically, group term life insurance includes disability coverage and or death accelerated death benefit and the choice is left with the employee. Different companies have various working situations, employment policy and financial obligations and the life insurance policies differ accordingly. There are many customer friendly features and options to meet the requirements of the company and the plans differ according to them.
The insurance companies offer a multitude of plans for various companies of all strata with variable features like living care benefit, liberal benefit amounts, dependent coverage and portability. The main advantage of a group term life insurance is the low cost benefits for the employees, without causing a burden on them by increasing the expenses.
Apart from companies, there are trade associations and unions and associations for college alumni that offer group term life insurance. Group term life insurance has some advantages over an individual policy. There is no need to meet certain health criteria in order to be eligible for group term life insurance. When the policy is taken for quite a large number of people, there is an averaging and subsidizing, giving a lower death benefit rate.
Since group term life insurance premium is taken from the monthly salary of the employee, it is an invisible and indirect savings in other words. In the event of the employee quitting the job from a particular company that has offered group insurance , it is feasible to transfer the group term life insurance policy into a whole life insurance policy- meaning, the employee can stay with the same insurance company that provided group term life insurance policy. This can be accomplished without undergoing any medical exam which may be beneficial for those whose health may get deteriorated as they get older.
In addition, group term life insurance is not taxable if the face amount does not exceed two thousand dollars. Thus, group term life insurance puts the safety of the employee in the safe hands and ensures a worry- free life. In the perspective of the insurance companies, they give more incentives to group term life insurance because it involves very less paper work and they get the business in bulk.
Many small companies cannot afford to set up a group term life insurance benefit program for their employees. If you work for a small company that has a minimum of five employees and your employer does not currently have a basic group term life insurance plan or a voluntary supplemental term life program, you can sign up for Flexible Plan of Group Term Life Insurance policy.
How It Works
Flexible plan of group term life insurance is a plan that is set up by and paid for by employees. It was created to provide low-cost group term life insurance to employees where NO employer paid group program is in place. It is also for groups that are NOT covered by a Beneficial Life Basic Group Term Life Insurance plan. Flexible plans are voluntary programs that do not require the employer to contribute financially.
Options that Affect the Group Policy Premiums
Flexible plan term life insurance rates are determined by how the group chooses their coverage: fully underwritten or guaranteed-issue. The group as a whole must choose one or the other. If the group chooses to be covered by the fully underwritten option, then a one page health form/questionnaire must be completed at the time of application. The one page health form covers the whole group. If the group chooses the guaranteed-issue option, no health questionnaires or medical exams will be necessary, however, the group term life insurance rates will be more expensive since the carrier will be insuring the group unconditionally.
Another option that will affect the flexible plan term life insurance rates is whether or not the group chooses to apply ?tobacco-free? or ?tobacco-users.? The option to blend the two is also available.
While the premiums will fluctuate depending on ages and coverage reduction schedules (these schedules allow for coverage to continue after the age of 65 for active employees), you can purchase your flexible plan group term life insurance policy with a one year rate guarantee. Additionally, if an employee chooses to retire or quit their job, they may also convert their policy to some kind of permanent coverage. Waivers of premium for disability are not included.
Restrictions
As with all plans, there are some restrictions that apply to flexible plan group term life insurance policies:
1. Premiums must be paid through payroll deductions.
2. Coverage terminates when the employee turns age 70.
3. Spouses are eligible for coverage but the face value may not exceed that of the employee or $250,000 (depending on your state's maximum based on regulations).
4. If you work in an industry that is considered a hazardous occupation, you are ineligible to apply. Your spouse's coverage is also subject to occupational approval.
5. Dependent children may be insured for either $2,500 or $5,000 until the age of 26. Proof of insurability is required.
The flexible plan group term life insurance is not available in all states so it is best to consult with a knowledgeable business financial advisor.
Both Lesley Lyon & Sharon Taylor are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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