March, 23 2017

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Group Life Insurance Review

Group Life Insurance Review

Author
  • Price
  • Portability
  • Convenience

Group Life Insurance Review

Pros: Free Coverage– Most employers offer (1x) your annual salary of complimentary or very inexpensive life insurance as part of the group benefit package.  This type of coverage is a great deal and you definitely shouldn’t turn it down.  Convenience- The additional life insurance beyond the free group coverage (called voluntary life insurance or supplemental life insurance) typically doesn’t require a medical exam.  Minimal Underwriting– The supplemental life insurance through your employer typically has less underwriting making it a viable option for someone who may be uninsurable elsewhere.

Cons: Expensive– The additional life insurance through your employer is typically much more expensive compared to what is available on the open market (see price comparison tables below). You Don’t Own It- Another major drawback in purchasing your life insurance through your employer is the fact that you don’t own it. This means if you leave your company for whatever reason the coverage will cease and your will be left unprotected.  (When you can take the coverage with you the premiums are often very expensive making it unaffordable for most.) Not Guaranteed– With group life insurance you’re at the mercy of the employer.  Annually the company can increase your premiums or drop the insurance altogether, which is becoming much more common as companies look to reduce costs.

Bottom Line: The standard (1x) your annual salary in free or nearly free life insurance offered by your company is a no brainer and you shouldn’t turn it down.  However, for most people with a family, this won’t not be enough life insurance to protect one’s family. The question then becomes; where should you purchase additional life insurance- through the group policy with your employer or on your own outside of work.  And the best solution for most people is to purchase it outside of work, separate from your employer.  While the convenience of purchasing additional life insurance through your employer may be tempting, in the long run it is often a big mistake.

There are two main reasons why it’s much better to purchase your additional life insurance on your own; price and ownership.  First, in most cases it’s much cheaper to lock in a rate on the open market outside of your employer than it is to buy the supplemental life insurance through your job.  Second, when you purchase life insurance on your own outside of work you are the owner and you are in control.  In today’s economy, many people don’t stay with the same employer their entire career.  If you ever leave your job for whatever reason then the coverage does not go with you and if it does it is often extremely expensive.  Buying a new policy later in life makes the premiums higher since you are older, and that’s if you’re still insurable. The bottom line is that unless you are uninsurable today, you will be much better off purchasing your additional life insurance on the open market separate from your employer.

Common Names: Group Life Insurance, Supplemental Life Insurance, Voluntary Life Insurance, Group Term Life Insurance, Group Universal Life Insurance, Group Whole Life Insurance, Supplemental Group Life Insurance, Employer Provided Life Insurance, Employer Sponsored Life Insurance, Employee Life Insurance.

Contact: For Group Life Insurance– Your employer’s benefits administrator or your employer’s human resource department- For Coverage Outside of Work– Click on the green button below to receive the rates for individual policies.

Top Group Life Insurance Companies: MetLife (Metropolitan Group), Prudential Life, Aetna, PlanUnited Health Group, AFLAC, New York Life, Jackson National Life, ING, Voya Financial, John Hancock, Lincoln National, Aegon (Transamerica), MassMutual Life, Principal, Humana, Unitedhealth Group, AIG, Sammons, Hartford, CIGNA, Mutual of Omaha,  AXA, TIAA Family, Sun Life, Humana, Guardian, PERS, Unu, Mercer, IEEE, ACS Group Term, AICPA, Assurant, AOPA, NASW Assurance Services Group, National Insurance Services (NIS),  Church Pension Group (CPG), SGLI, FEGLI, ASME, Ameritas, United Fire Group, DAN (Divers Alert Network), KPERS, AIChE, Minnesota Mutual, StanCorp Financial, Great West, Equitable, Aviva, HCSC, Symetra Financial, Wellpoint, Reliance Standard, Forethought, Kaiser Permanente, Erie, Anthem Life-Blue Cross Blue Shield, ASCE, Combined Insurance.

Group Life Insurance with Employer vs. Individual Life Insurance Prices

Below are the rates for an actual group life insurance plan and the rates for the same coverage if the life insurance was purchased outside of the employer.  This scenario is typical of what you will find for supplemental life insurance plans vs. individual life insurance.

The first group life insurance plan in the table below goes up every 5 years.  The group rates are fairly competitive when one is younger but they really get expensive as one gets older.  The second table of prices are an apples to apples comparison for a 20 year fixed term.  As you can see it’s not only less expensive to purchase life insurance outside of work, but you own the policy won’t have to worry about losing the coverage if you ever change employers or if your company drops their plan.

AgeNEA Group PlanProtective LifeBanner LifeGenworth Life
40$16.15$11.83$12.25$12.25
50$37.47$22.36$22.97$23.19
60$92.11$47.34$46.48$48.34

Sample rates for a $250,000 policy on a 10-year term at each company’s best health class, female, non-smoker compared to a Group Term Insurance Plan.

AgeNEA LevelBanner LifeAmerican GeneralGenworth Life
40$27.05$17.50$17.41$17.72
50$56.96$35.22$36.01$36.53
60$160.45$86.63$92.23$93.63

Sample rates for a $250,000 policy on a 20-year term at each company’s best health class, female, non-smoker compared to a Group Level Premium Term Life Plan.

Group Life Insurance Review

As you can see in this group life insurance review, we recommend that you compare both options, however for most people securing a policy separate from work will be more advantageous.

What is your experience with Supplemental Group Life Insurance?  Tell others if you would recommend it to your friends and family.  Please leave a comment and rating below.

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Group Life Insurance
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