If you are considering a group life insurance policy for employees, then it is important to make a well informed decision, as, after all, no personal situation is the same as the next. Therefore, let us take a look at the pros and cons of group life insurance for your business.
Pros
Cover people with health conditions
Many individual life insurance policies do not cover people with pre-existing health conditions or have a list of health conditions that they do not cover. In more extreme circumstances, people with pre-existing conditions might have to take out illness insurance to bridge the gap over what their life insurance doesn’t cover.
However, group life insurance for businesses do not require individual medical exams as the risk of claims is spread out over the group of people covered. This means that everyone gets the same coverage, whether they are healthy or suffering from a health condition.
Age is irrelevant
Individual life insurance policies tend to increase in price as you age – as morbid as it may sound, the older you get the more likely you might be to claim. But with group life insurance for employees, age doesn’t matter! All individuals covered under the policy get the same coverage for the same price regardless of age.
Low cost or free for employees
Some employers might offer group life insurance as part of your paycheck, whereas others might allow you to opt into the scheme for a small price. Either way, the benefits massively outweigh the costs.
Inexpensive for employers
As they are easy to sign up for, group life insurance is also inexpensive for employers. Plus, employers might also receive a payout in the event of an employee death to cover the sudden vacancy.
Even if employee life insurance might cost you a bit more than you thought, this cost can pay for itself by improving employee morale and attracting new employees. In fact, it is reported that 80% of employees would prefer benefits such as life insurance rather than an increase in salary.
Cons
Limited to employer’s choices
Unlike with individual life insurance policies, you won’t be able to make the choice for yourself about how much you pay, how much you are covered for, and which company you want to be insured with.
Instead, you are limited to the policy that your employer has chosen to offer. Thus, it is important to make sure that you have done your research on the group life insurance your company offers before you opt into it.
Could be more expensive for young people
Young, healthy people are more likely to have a cheaper individual life insurance policy as they are less at risk of having to make a claim. However, group life insurance insures everyone the same, without considering the health and lifestyle of the individuals.
Coverage limited to your time in employment
If you lose your job, then you will also lose your group life insurance policy. This is because the insurance is linked to the company that employs you, rather than the employee themselves. Therefore, there is no guarantee that you will have life insurance at the time that you really need it.
Overall, there are some situations in which group life insurance is fantastic, but some situations in which individual life insurance might be preferable. It all comes down to your personal circumstances as an employer or as an employee.
