Group term life insurance is a policy that applies to everyone in a group in the exact same way. In some cases, this type of insurance may be provided at an employer at a very small cost, or even no cost, to the employee. This type of life insurance policy is one of the most common types of benefits offered by an employer.
The attraction for employers to group term life insurance is in its affordability. Due to the fact that the life insurance policy covers a broad group of people, it is relatively inexpensive. The risks are spread out among a larger group of people. Therefore, the insurer can afford to charge a lower premium than it may with many other types of life insurance policies. Even when the employee must pay a portion, it is generally a very small amount each month that will go toward premiums.
One of the key things most employees should remember about this benefit is that it is generally used as a supplemental life insurance policy. The payout is not enough to truly take care of a family for very long, if the major breadwinner is lost. Rather, group term life insurance will generally only pay one to two year's salary of the deceased individual. After funeral expenses, this may not amount to a great deal of money for many people.
While many people may not worry about the term portion of the name, group term life insurance, like an term insurance policy, must be renewed every so often or it will expire. Often, this is an annual policy, which may require a premium adjustment every year or so. In most cases, the company administration, likely the human resources section, will take care of this without the employee being involved. However, if the employee does contribute to the premium, he or she will likely be given the option to renew or not.
Employees who are in a group term life insurance policy should be careful to keep information up-to-date. For example, if a beneficiary needs to change, that should be taken care of. In some cases, because the policy is one of minimal maintenance for the insured, it is easy to forget some of these details. However, this could result in the benefits being paid to a person that should no longer receive them. Or, if that person is also gone, there may be a legal battle over the rightful beneficiary.