Saving You Money For Life

Group life insurance is coverage that you might get free at work. It’s also offered as an additional benefit to employees.

Typically, it does not require a paramedical exam as you would have to take when purchasing an individually underwritten policy. Because of this lack of scrutiny, the insurance company anticipates that they’ll get some good risks, along with some bad ones. Without the ability to screen out the bad risks though, the price must necessarily reflect the lact of underwriting. Therefore group term life is more expensive than individually underwritten coverage, assuming you’re healthy.

It also tends to be billed in 5 year age bands. Each time you cross over into the next age band, the price per thousand of coverage goes up. It goes up faster as you get older (i.e. the jump between age 40-45 and 45-50 is smaller than the next jump to 50-55, and so on).

Individually underwritten plans are not only cheaper, and more portable, but also tend to be purchased with 20 or 30 year level guaranteed premiums.

All in all, group term is a convenience item, generally overpriced (especially for healthy people), and most people would be well-advised to purchase individual term life insurance. By doing so, they’ll save money… a lot of money. And, have a policy that can’t be taken away from the, with a level, predictable premium for a long as 30 years.