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Life Insurance: Types Of Available Policies

Group Life Insurance

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Group life insurance is insurance that you purchase through, or is provided by, a group -- such as an employer, union, bank, school, association, or other type of organization.

Generally:

  • The "group" which offers the coverage is the owner of the policy. Each insured is a "certificate holder" for a specified amount of coverage.
  • The certificate holder (you), has the right to name the beneficiary.
  • If you leave the group for any reason (including for disability), you generally have the right to convert group life insurance to an individual permanent type policy.
  • There are seldom health questions asked when purchasing group life insurance.
  • There may be a waiting period during which death caused by a pre-existing condition is not covered.

Most group life insurance policies are term insurance, although some are universal life.

Group Term Insurance:

  • Just like individual term insurance, group term insurance is issued for a specified period of time and may contain a right to renew.
  • Group term insurance generally includes a right to convert to individual coverage at the end of the specified term (or if you leave the group)
  • Group term insurance is always owned by the group offering the insurance. The group, as owner of the policy, will take care of the administrative functions of maintaining the policy. However, you may periodically be required to indicate your desire to renew or maintain your coverage. If offered through an employer, the request for you to renew your interest is often done on an annual basis or during what is known as an "open enrollment period."

Group Universal Life:

  • Group universal life insurance is usually an individual policy issued to each of the qualifying members of a group. It is considered group insurance because it is offered as a result of participation in the group which is offering the coverage, generally an employer.
  • Just as with individual universal life insurance, group universal life is a flexible product, allowing changes to both face amount and premiums.
  • Premiums are usually payable to the employer, or group, which may contribute a portion of the cost.
  • A group universal life policy can often be continued indefinitely by simply making payment of the premiums directly to the insurance company - even if you are no longer a member of the issuing group.

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