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Know Your Employee Group Term Life Coverage

If you have a job that offers you life insurance as a benefit then you have what is known as a Group Term Life Insurance Policy. For big business, group term life insurance coverage provided by the employers is a great employee retention tool. These policies typically come with a one year term and are renewed every year. Here are a few factors you should know as an employee:

Group term life insurance policies (GTL) are issued to groups formed for purposes other than obtaining life insurance. These could be groups of employees of a company, members of a trade organization and members of associations having a common interest – for example automobile owners association, marathon runners association, etc.

Many employers opt for GTL policies to offer life coverage to their employees. Existing employees are covered from the date of issuance of the policy and new employee gets coverage from the date of joining. The coverage offered to employee may vary from organization to organization.

Some organizations offer flat coverage per employee, while some organizations choose to offer graded coverage, while some companies offer life coverage equivalent to a multiple of the annul cost to company (CTC) of the employee.

The more progressive employers mention clearly the amount of life and health coverage an employee is entitled to in the schedule of benefits attached to appointment letters given to employees.

Depending on the size of group, average age of the group, occupation mix, sum assured, past mortality experience and other factors, the premium is then set by the insurer. The premium is paid by employer and a master policy is issued to the employer. Since the premium is paid by the employer, it is an admissible business expense, employees can’t enjoy tax benefits on the premium paid by the employer on their lives. Each GTL policy typically comes with a free coverage limit or no medical limit, any members having sum assured up to the limit get covered automatically.

Members who chose coverage above the set limit are asked to either sign good health declaration or answer health questionnaire or go for a medical examination or a combination of these. If a member fails to clear the underwriting requirements they are not denied the life coverage instead the sum of the policy is capped to the free coverage limit. Keep in mind that GTL policies pay the coverage amount upon death of the member only while still in service. If your only form of protection comes from you employer it may be time to look at owning your own policy. Get a free no hassle quote today at www.lifesolutionsblog.org.

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