Group Life and Long Term Disability
What is Group Life Insurance?
Group life insurance provides coverage the lives of multiple persons which may include some or all employees of a business, members of a labor union, or members of an association. Depending on the group life insurance policy, the insured person may receive life insurance coverage as an employee benefit or they make a contribution to pay part of the cost.
Differences Between Individual and Group Life Insurance:
Unlike an individual life insurance policy, group life insurance coverage is not based on the risk associated with an individual person. Group life insurance policies are established based on the risk factor of the group as a whole, so higher risk members of the group are protected from being adversly singled out and either excluded or forced to pay more. A member of a group life insurance policy is typically protected from their employer or organization cancelling their specific insurance as long as the person remains a member of the group. They cannot be exempt from the group life insurance coverage as long as they remain in the group, and may have the option to continue to buy into they group plan for a certain period of time after they leave.
Advantages to the Employer:
- Provides an important employee benefit and helps maintain key employees
- Premiums are inexpensive and tax deductible to the employer
- Provides an important social benefit to society
Advantages to the Employee:
- Employee receives life insurance without medical consideration
- Employee receives up to $50,000 preteciton income tax free.
- Employee has the right to convert insurance to a permanent plan upon leaving the group.
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