The main advantage of having group term insurance, as opposed to purchasing individual policies, is the value it adds to your company’s benefits package. Group term insurance aims to eliminate unnecessary costs associated with offering life insurance coverage.
After all, why should you have to pay premiums just to ensure that your employees and their dependents are financially secure? That said, it’s possible to obtain lower rates on this type of coverage by taking certain steps. Let’s check how group term insurance can offer you savings without compromising coverage.
What is Group Term Insurance?
Group term insurance is a type of group life insurance that protects an organization’s employees and their dependents. Like disability and Critical Illness policies, guaranteed benefits are provided for specific periods of time. The policy’s initial benefit period is normally 10 years, and this can be increased to 20 or 25 years. Depending on the policy you select, group term insurance can be especially cost-effective in two ways.
First, you may be able to decrease your premiums by selecting a shorter life expectancy option. By choosing a policy with a 10 or 15-year maximum, you’re potentially saving money each month by avoiding the added cost of a longer-term policy. Second, you may be able to decrease your premiums further by purchasing a single-sum/single-death option. This is particularly beneficial for companies with a high number of deaths among their employees since it can result in significant savings.
How Group Term Insurance Can Save You Money
Group term insurance can increase your company’s overall benefits package without increasing its overall costs. That’s because you’re not paying premiums for individual coverage. You’re instead paying for the policy’s additional value. The policy’s initial benefit period provides some of this added value. For example, a 10-year policy with a 25-year maximum may provide you with additional coverage for 10 years at just one-third of the cost of a 20-year policy.
Summing up: Is it possible to get lower rates on group term insurance?
Yes. In many cases, getting lower rates on group term insurance is possible. First, you may be able to decrease your premiums by selecting a shorter life expectancy option. By choosing a policy with a 10 or 15-year maximum, you’re potentially saving money each month by avoiding the added cost of a longer-term policy.
Secondly, you may be able to decrease your premiums further by purchasing a single-sum/single-death option. This is particularly beneficial for companies with a high number of deaths among their employees since it can result in significant savings.
Benefits of Having Group Term Insurance
Protection at No Additional Cost – Group term insurance provides protection at no additional cost. That means that you don’t have to shell out any money upfront for this coverage. Instead, you simply pay a set amount each month for the duration of the policy.
Protection for an Entire Family – Another advantage of group term insurance is that it provides protection for an entire family. That’s because it covers the policyholder, spouse, and any dependent children.
Disadvantages of Having Group Term Insurance
Need for Documentation – The policy documents will require a degree of explanation, particularly because you’re covering an entire family. This could be a potential barrier to individuals who don’t regularly provide information to insurers.
Need for Investment – Like any financial product, you’ll need to invest to reap the benefits of group term insurance. In this case, you’ll be making an investment in the policy’s life expectancy, which can cost you money in the form of higher premiums.
Policy Lag – It’s often said that you can’t have your cake and eat it too. In other words, you can’t have both higher premiums and lower premiums. If you select a policy with a lower premium, you may be surrendering benefits in exchange for higher premiums.
Group term insurance is a great addition to the benefits package of any organization. That’s because it provides protection at no additional cost while covering an entire family. Group term insurance may come with a few disadvantages, but its many advantages outweigh them. And, with proper planning, getting lower rates on group term insurance is possible.