What Is Group Term Life Insurance? [Top 3 Advantages & Disadvantages]

Group Term Life Insurance Advantages

There are several advantages when buying a supplemental group term life insurance policy from your employer.

Guaranteed

For many employees, this is by far the number one advantage of a group life insurance policy? If you have any health condition or high risk situation that would result in being declined life insurance with a traditional policy — a group term life policy might be your only opportunity for coverage. If you can qualify for traditional coverage, your rate might be much higher than group coverage depending on the specifics of your health condition.

Price

Group term life insurance may actually be a good deal. Group life insurance can be cheaper than buying your own individual policy. It will typically depend on your age when you get it. Rates increase quickly when you get older. Most group life policies are based on rate bands. These rate bands have a specific cost and go up in price for each band. For example, a group term life policy could have rate bands every 5 years. 

The price of the group life policy would change at ages 25, 30, 35, etc. As we mentioned previously, your rate will probably be a good deal when you’re younger, but will increase quickly later on.

Simplicity

Having a simple and convenient way to secure coverage quickly is a big advantage with group term life insurance. Buying group life coverage from your employer might be the simplest way to provide financial protection for your family. Group policies are a type of no medical exam term life insurance — so they’re very convenient and simple to purchase.

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