Group Life
Group life is typically term insurance purchased one year at a time, and the
insured has very little control over the conditions of coverage. Group life is
purchased by an association of individuals with a common defining point,
usually through some central point such as the same employer. Generally, an
insurance company issues a master policy, and each person in the group receives
a certificate of insurance. One advantage of group life is that, although
premiums are typically not guaranteed, it lets members of the group pool their
risk to lower costs much below what whole life or term life policies would cost
if purchased independently. In addition, an employer may subsidize part of the
cost as a fringe benefit for his or her employees. Still another advantage of a
group plan is that a medical examination or health history usually is not
required. Some disadvantages are that renewability is typically not guaranteed
and conversion options are often expensive. Also, the group life coverage only
applies to members of the group. When an individual leaves the group -
takes another job, for example, or drops his or her membership in the
association that purchases the coverage - the coverage for that
individual will end unless the policy is converted to private insurance at a
higher cost.