How much do you know about group life insurance policies? According to Health IQ's recent survey, only 5 percent of millennials understood the biggest risk of having a group policy without an individual life insurance policy compared to baby boomers (67 percent) and Gen Xers (57 percent).
Group life insurance policies are offered through an employer or a membership organization, such as a church or club. As with most services and products, these insurance policies have their pros and cons for individuals. Group policies can cost considerably less than other options and require no medical exam or medical underwriting. However, they tend to be less comprehensive and portable.
Before choosing a life insurance policy, decide what your family will need if the unthinkable happens. Some families may need only to cover funeral costs, while others will have significantly more needs after a loss of income. Group policies typically have low limits and values, and if you change jobs or discontinue membership, you likely won't be able to take your policy with you. This situation could leave you in the uncomfortable situation of having to find a new life insurance policy quickly and without the discounted rates you enjoyed with your group policy.
Fortunately, many employers and organizations provide an opportunity to purchase additional life insurance on top of the group policy. A supplemental policy may make group life insurance more practical and appealing. You get the convenience and low cost of a group policy without sacrificing value. Often supplemental insurance can be purchased without a medical exam, although one may be required to exceed a certain dollar amount of coverage.
Find out why it's important to review your life insurance needs every five years and other considerations for life insurance with the Health IQ in-depth FAQ.