Group Life Insurance

Group life insurance is a life insurance policy that applies to a large number of people. These policies are often found through employers, banks, and any other groups that an individual belongs to. Upon the death of the policyholder, the money goes to a designated individual or group.


1. Servicemembers' Group Life Insurance - Alternative

Servicemembers' group life insurance is an alternative to life insurance available for typical groups. This particular type of life insurance is only available to those members who are members of the United States Armed Forces. This means that no one, including spouses or dependents, can be covered under a policy. Spouses and dependents of someone who is in the Armed Forces can only recoup the benefit in the case of the policyholder's death, and only if they are named as the beneficiary. This policy, which is sometimes called SGLI, begins with $50,000 worth of coverage payable upon the death of the policyholder. This type of group life insurance policy is limited to a maximum amount of $400,000. Once a recruited member leaves, or retires from the Armed Forces, they can change their policy to a different service. The Veterans' Group Life Insurance is available for anyone who served time in the Armed Forces. The same limits as described above still apply. An individual who retires from the Armed Forces can apply for a policy of $50,000 up to $400,000. The cost of the policies is typically $.07 for every $1,000 of coverage the user seeks. For $7 a month, an individual can receive $100,000 of coverage. This applies only to individuals who currently serve in the Armed Forces, have served, or have retired from the military. It does not cover spouses or dependents.

2. Designating A Beneficiary

Once an individual has applied for group life insurance, and is granted coverage, they may need to file a Designation of Beneficiary document. This document essentially states how the money in the policy will be spread out upon the death of the policyholder. Certain life insurance companies require that an individual decide who their beneficiary, or beneficiaries, are when they first apply for coverage. Other companies allow policyholders to make this decision later on in the process, after they have been approved. There are also a large number of life insurance providers that never require an individual to make this decision. If the policyholder has a legally binding will, and this will has been filed, then the company will waive the beneficiary requirement. Users are advised to ask their own particular insurance provider about their beneficiary requirements.

3. Breaks In Service

A break in service is known as a period of time in which the policyholder leaves the organization where they previously had coverage. When the holder returns to that particular employer or organization, this is known as a break in service. Depending on the reason why a person leaves, the coverage may be extended for a set period of time. Breaks in service usually apply only to employer-based life insurance, and not insurance provided by another organization such as a school or financial institution. An individual who leaves their job for military service will be granted an extension of their benefits up to twelve months following the day they leave the military. For example, if an employee is put on active duty, up from reserve status, their benefits will still be in place when they return. Those benefits will be held in place for a year following their last day in the military. This gives the individual time to return to work and begin making their payments again. An individual who voluntarily leaves their employer, or is fired, will be given twelve months to collect on their benefits, following their last date of employment.

4. Employer Group Life Insurance

Employer based group life insurance is often the most popular option for those looking for benefits. Many employers allow individuals to purchase a life insurance policy that is unique to their company. The individual can still determine the amount of their policy, from a few thousand dollars to more than a million dollars. The amount of the policy determines how much money the employee needs to pay every year to guarantee their benefits. Employer based group health insurance often requires that the employee choose a beneficiary during the application process. When employees leave the company, either for voluntary reasons or involuntary ones, they are often not able to carry their benefits with them. They are typically given a twelve-month window to collect on their benefits, starting from the last day they were employed. If an employee moves to a company that uses the same insurance provider, they are usually able to reenroll and regain their previous benefits. The same holds true if the employee returns to their original company, even after the twelve month period has passed.

5. Organizational Group Life Insurance

Individuals who cannot receive life insurance through their employer can look to any organizations they belong to for coverage. Many financial institutions include a specific life insurance policy on each of their members, even if the members are unaware of this fact. This amount is typically $10,000 available upon death, but members may also be able to increase this amount throughout the year. Individuals can also take part in group life insurance provided by their higher learning institution. Any student enrolled in a college or university has access to group life insurance through their school. There are social clubs that sometimes provide group life insurance for members. Individuals should also look at their spouse and parents as a way to find life insurance. Parents are able to buy life insurance policies on their adult children, while a husband or wife can add their spouse to an existing policy.

6. Decrease And Increase Coverage

Prior to enrolling in a life insurance program, the individual will be required to undergo a complete physical, along with routine blood tests. This is done to determine that the individual is coverable based on the regulations in place by the insurance provider. Many companies use this system to ensure that only qualified applicants, and those not suffering from a serious illness, are covered. This physical and tests are in place for one year, or the twelve months that constitute a calendar year. Once an individual policyholder elects to increase their coverage, the company will require a second physical if more than a year has passed. Many insurance companies are hesitant to grant a sudden increase in benefits because it may show that the holder has recently discovered they were seriously ill. If the individual passes this physical, the increase in benefits will often be granted. If they do not pass the physical, the benefit increase may be denied, or limited to a smaller amount. Those who wish to decrease their benefits may do so, but their premiums are often based on the amount of coverage. Decreasing coverage will not result in any overpayments or back payments that are returned to the holder. Instead, this money is kept to pay for the life insurance policy. There are some companies that only allow their policies to be changed at certain times of the year. This period is known as an "open period," and the company may only allow changes during this period.

7. Payment Of Benefits

In many cases, an individual cannot make a withdrawal from their group health insurance policy. One notable example is a living benefits clause, which will be discussed in depth below. Depending on the policy, an individual holder may be able to borrow against their life insurance policy. In this situation, the person is borrowing money from their policy to pay bills or make a large purchase. However, they are required to pay this money back into their policy at a later date. The way a typical life insurance policy works is that an individual applies to a company and designates a beneficiary. This beneficiary may be changed at a later date if the individual chooses to. The holder may also choose to have their benefits spread over several individuals such as their spouse and dependent children. Once an individual passes, the insurance company needs to be notified, though in some situations they may learn of the death themselves without notification. The insurance provider will then require an official police report, or medical report, to determine payment based on the cause of death. If the death is ruled as a suicide or unknown, the company may stop payment. By the same token, if the beneficiary is the reason for the policyholder's death; i.e., murder, the insurance company cannot pay out to that person based on current law. On the other hand, if the death is ruled "accidental," the policy amount is doubled. This law is known as double indemnity and states that in the case of an accidental death, a life insurance policy is doubled. This money will go to the holder's designated beneficiary, beneficiaries, or the person designated in their will.

8. Living Benefits

Living benefits are a highly popular choice for individuals who open a group health insurance policy. With a typical group health insurance policy, the money is not paid out until the death of the policyholder. In some cases, the beneficiary will need to provide proof of the holder's death prior to the insurance company releasing the funds. Living benefits are different because they allow the holder to actually withdraw a portion of their benefits while they are still living. Many insurance companies only allow this to happen if the holder can provide proof that they will not live beyond nine months. These nine months are from the date of applying for the living benefits clause. An individual who is given a terminal diagnosis, or who is suffering from a terminal illness, may apply for the living benefits clause. The holder is often required to provide supporting documentation from their primary care physician stating that their life expectancy is nine months or less. If an individual is granted this benefit, and lives longer than those nine months, they are not required to pay back any portion of the money. Living benefits must be applied for by the holder, and no one else who may be speaking for that individual such as a spouse or dependent. In some cases, the insurance provider may allow someone else to apply for the benefits. This typically happens if the holder is incapable of contacting the company because they are bedridden or cannot leave the hospital. This can be especially helpful for those who are making funeral arrangements before they pass. There is often not a limit set on how much a person can withdraw.

9. Need More Coverage?

Individuals can receive life insurance benefits from a number of places with the employer being the first and most obvious option. Group life insurance is also available from any organizations the individual may belong to including their school, social organization, or financial institution. In many situations, this amount is still not enough for the individual. They may feel as though they need more money to guarantee the comfort and safety of their family members. In some cases, an individual may want to purchase additional life insurance to pay for their funeral costs, and save their family from that burden. This is an obvious concern as the average cost of a funeral in the United States is close to $10,000 now. Those who are looking for more coverage should first contact one of the providers they currently have to ask about possible increases in coverage. If coverage is denied, as it sometimes is, there are other options. There are a number of private companies that provide life insurance for individuals, even if they already have group life insurance from another provider. These companies will first require that an individual fill out an application for insurance, and then visit a doctor for a physical examination. If the applicant passes those tests, a policy will be granted. In a few cases, the company may also accept the results of a previous physical in the last twelve months, rather than a new physical.
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