Understanding Your Options: Group Term

Group term life insurance is one type of life insurance that opens doors for those considering purchasing life insurance. The group distinction in this type of life insurance implies that the group, which could be an organization or an employer, is the one providing the insurance, or some form of compensation for the policy. Many times, an employer will offer to pay for part or all of the life insurance of the employee while they are working with the company. Other policies will extend past the actual date of employment. In all cases, it is a type of tem life insurance offering financial protection in the case of your untimely death.

Understanding what term life insurance is happens to be one of the most important parts of the process. A term life insurance definition will center on the word term. There are many types of life insurance available, but what makes term insurance more unique is that it offers a set amount of time for coverage. While other forms, such as permanent life insurance and whole life insurance offer you protection with no end date, term life insurance does have a cut off date, which is the length of time agreed to in the policy. You can find them as 1 year and 5 year terms, up to the more popular 15 year terms, 20 year term life or even 30 year term life insurance. With group term life, the policy may only be in place for a set amount of years, with or without employment.

The other important thing to understand about group term life insurance is that it provides you with protection in a one time payout. IF you die while the policy is in place, from natural causes (or the exact reasons listed in your policy) the insurance company will pay a one time death benefit. This payout is for the face value of the policy. There are many different amounts that can be selected. Usually with group term life insurance, the employer or organization will select the amount of coverage given.

Still, you only get a one time payout. In contrast to other forms of life insurance such as whole life insurance, you can not borrow against this type of insurance. You also can not use it at the end of the term for any needs like you can do with permanent life insurance. Rather, it only provides the payout one time and nothing more. That is because it does not build up any cash value over the lifetime of the policy.

One of the best parts of any type of insurance is that you can have more than one policy. If you would like additional protection from what the group term life offers, you can purchase your own policy individually. It is important to consider the amount of money you should have available to you when you do this, as it is incredibly important for you to consider the value of policy in comparison to the needs of your family.

There are many types of term life insurance available to you, including convertible term life insurance, which will allow you to convert the term life products you have into long term or even whole life insurance policies. Ask your representative if this is available for the type of life insurance they are offering to your group. Also, insure that you understand if you will be making annual premium payments and how much that will be. Explore these types of insurance as you see fit, too. The life insurance policies available to you provide you with the highest quality protection financially for your family in one of the most difficult times it will face.

< Prev		Next >

[ Back ]

Main Menu

Types