What Are the Advantages and Disadvantages of Group Plan Life Insurance?

Typically, life insurance policies that come under the umbrella of a large group plan involve very little, if any, underwriting and automatically covers all employees. Depending on the size of the group however, some underwriting may be required especially if the group is slightly smaller. If you decide to take out an individual life insurance policy, you’ll likely be required by the insurer to prove you qualify for coverage. This would involve supplying documentation attesting to your physical health. They may even ask that you submit to a medical examination and use the most recent results to determine insurability.

If your life insurance coverage falls under your employer’s group life plan, that means that your employer is the policyholder. Any decisions regarding modifications made to your policy, or even whether or not to continue your policy are made by the company’s management team. If you are a part of a labor union, the specific terms of your policy are often contained in your union contract. If you’re an individual policy holder, the terms of the policy are controlled by you, and you are free to modify or terminate the policy at any time.

Coverage under your company’s group plan will discontinue in the event you quit your job or are terminated. However, you are often presented with the option of continuing coverage by converting your group plan over to an individual policy. You generally are given 30 to 90 days to do this before the policy terminates altogether. Since individual insurance policies are not determined by employment, changing jobs will not in any way modify or terminate your policy.