Group Term Life Insurance

Written by Strahan Financial Services

Life insurance Group Term Life Insurance is Like Group Health Insurance.

Employers offer Group health Insurance as an employee benefit. This type of group insurance coverage covers employees with varying health conditions and various ages.  Insurance companies understand that not every employee is going to suffer a significant health crisis at the same time.

With group term life insurance, the same principle applies, all the people covered under the group term life policy are not going to die at once. Insurance companies assume the risk of paying the claims and using the premiums from the group members as necessary in both cases.

Many insurance brokers seldom recommend carrying group term life insurance and not having backup coverage.  Unlike other valuable employee benefits, defective supplemental Group Life is in a substandard high-risk pool and always overpriced by about 200% in the long run. Compare the charges that quickly increase with age and avoid paying for this extremely high-cost coverage.

Group Life always seems cheap, but the premium charged 26 times a year increases rapidly with each 5-year age bracket.  The premium and coverage are not guaranteed.  With a group term life insurance certificate from your employment, you rent your life insurance not own it. And, since group term life insurance is not a contract that you own it is not portable,  so you cannot take it with you if you change jobs, You lose your life insurance coverage.

The Advantages of Group Life Insurance

Advisors recommended that you carry additional life insurance and not rely solely on group term life insurance for financial protection. For some people, there are advantages to consider carefully.

  • Group Life Insurance requires No medical exam
  • Group Life Insurance is an excellent choice for those in Poor health
  • Group Life Insurance only requires you to place an X in the box on a form
If someone is reluctant to undergo a medical exam, many life insurance companies do not require a medical exam these days. Since you are part of a group, no exam is necessary through group term life insurance.  
With group term life insurance, you can find coverage regardless of poor health.  You are considered a more desirable customer, irrespective of your lifestyle, or your health.

With group term life insurance, you place a mark in the correct box on the benefits form. It is a simple form.

The Disadvantages of Group Life Insurance

  • Group Life Insurance is not usually Convertible.
  • Group Life Insurance is less flexible death benefit schedule
  • Group Life Insurance promotes a false sense of security
  • Group Life Insurance can be taxable   
  • Group Life Insurance has an increased expense of continuing coverage
  • Group Life Insurance carries a possible termination upon separation from the group

If you leave your job, your group term life insurance is not portable. You cannot take it with you to your new employment. Your life insurance coverage is terminated. Consider this; what if your health has changed for the worse during the years you were employed? When applying for individual term life, you take the chance of being turned down and being uninsurable.

And, if you are to qualify for term life insurance with a health condition or combined health problems, you may end paying a high premium making your insurance protection unaffordable. You may not be able to afford the coverage your family needs.  You most likely would be required to take a medical exam at your new age. Insurance premiums are based on your age.  The older you are, the more expensive the coverage will be.

Considering flexibility, the group term life insurance coverage offered through an employer may not be as much coverage as you need. How much life insurance do you need? You may need to apply for an additional term life policy along with your group policy if they cannot increase your coverage.

Group Life Taxes Treatment

Under current law, plan participants receive the first $50,000 of group term life insurance entirely tax-free. However, the value of group term life insurance coverage in excess of $50,000 is considered income to the plan participant, and that income must be recognized by the plan participant for income tax purposes

I met with a client years ago who had just retired.  He bought a new home, moved his divorced daughter and her children in the new home to support and protect them.  He now needed a considerable amount of life insurance coverage. Unfortunately, he was much older and had severe health problems.  He assumed he would be able to keep his group term life insurance after he retired. He stated that during his time of employment, he was never advised that his insurance coverage would terminate upon retirement.

Long story made short; the only insurance he could qualify for was a guaranteed life insurance product for $10,000, just enough to bury him.  He was declined coverage by numerous companies over a year’s time. He was not married and had spent his savings on the down payment on the new home. It was a sad situation that could have been prevented if he had purchased a term life policy before his health had declined.

Making the Right Decision

First, apply for any free coverage at work.  Next shop around.  You might find a great rate that is comparable to the group term rate, especially if you are young and in good health. If the premium of a similar policy is higher, you should consider applying for the policy and increasing your death benefit. You can always lower the death benefit in later years if you do not need as much insurance.  we can help in your search to find the best life insurance coverage.

Consider the fact that you cannot keep your group term life insurance policy if you change jobs or retire. You own and control purchased term life policy outside your group coverage. You are not merely renting coverage and facing eviction at some future point.  When you own your insurance, you control this asset. If you have group term life insurance, someone else manages your life insurance coverage and can change it annually.

The next step in choosing the best life insurance company is to contact an experienced independent agent. Independent agents have extensive knowledge of the life insurance industry and company underwriting guidelines. As independent agents, we know how to qualify you for the best possible life insurance rates using the most reputable companies. As independent agents, we will listen and are committed to helping you find the best policy tailored to your individual needs at the best price.

Contact an Independent Agent

One thing to keep in mind when searching for life insurance. Many websites offering term life insurance are call centers with cubicles of agents using a script to sell life insurance. Some of the websites sell your information to 10 or more agents, which results in you receiving many calls over many days. We are not a call center.

Our staff has extensive knowledge of the insurance industry. Strahan Financial Services is independent. We only represent the top 1% of the market place. We know the companies, the products they offer, and we use the latest technology to improve your experience and get your policy issued as fast as possible at the least expensive rate.

Some top-rated well-established companies we work with are Protective Life, Cincinnati Life, Mutual of Omaha, Transamerica, American General, Prudential, Assurity, and Pacific Life. We are not obligated to any company. Finding the company that is the right fit at the lowest possible price with the best rating and benefits is our goal.

If a policy is issued and our back-office underwriter and physician think another company can beat that price, we will move your application to that company. You will now need to complete an additional medical exam.  We are committed to finding you the best policy possible for our clients.

If you prefer to work on your own, you can even run a needs analysis, health analyzer, receive quotes, select a product, and a carrier and complete pre-application on your own!

about Strahan Financial Services

About Strahan Financial Services
About Strahan Financial Services

We work with individuals across the nation to secure the best life insurance rates.

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[…] Group Term Life Insurance […]

September 26, 2019 at 2:33 pm

[…] Group Life is Never Recommended. Unlike other valuable employee benefits, defective supplemental Group Life is in a substandard high risk pool and always overpriced by about 200%. Compare the charges that quickly increase with age and avoid paying for this extremely high cost coverage. Group Life always seems cheap, but the premium charged 26 times a year increases rapidly with each 5-year age bracket. The premium and coverage are not guaranteed. With a certificate, you rent, it is not a contract you own. It is not portable so you lose the coverage when you leave your job for any reason, including retirement, your coverage usually stops. So, now you relied on your group life insurance and now you need life insurance and are age 50? What if you are now age 60? What if you are now age 70? Usually, you need a great deal more life insurance than you a provided with on your group policy. How do you find the best life insurance company?  How much insurance do you really need? […]

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