group life insurance
Buying individual life insurance means a medical exam, detailed questions and weeks of underwriting. But an employer wanting to cover all 500 staff cannot underwrite each one — and most employees would never bother to apply. Group life insurance solves this by insuring a whole group under a single contract, simply and cheaply.
In group life, one master policy is issued to a sponsor — typically an employer, but also unions or associations — covering its members, usually as one-year renewable term insurance. Because the group is taken as a whole, individuals often get guaranteed-issue coverage with little or no individual underwriting (for example, a flat benefit of one or two times salary). The employer commonly pays all or most of the premium, which is set for the group's overall risk and re-rated each year. The members are the insured lives; they hold certificates, not their own policies, and the cover usually ends when they leave the group, though it may be convertible to an individual policy.
Actuaries price group business on the group's pooled experience rather than each life, and the size of the group is what makes light underwriting safe: with hundreds of lives the law of large numbers makes claims predictable, and the natural mix of healthy working people keeps antiselection low. The honest caveats: group cover is generally not portable — it can vanish when you change or lose your job, often precisely when your health may have worsened — and the flat benefit (a multiple of salary) is frequently far less than a family actually needs, so it is best seen as a valuable baseline, not a complete plan.
A company gives every full-time employee group life equal to twice annual salary, paid for by the firm, with no medical questions. A 35-year-old earning 60,000 is automatically covered for 120,000. When she resigns two years later, that cover ends; she may convert to an individual policy, but at individual rates and no longer for free.
One master contract covers the whole group, with little individual underwriting.
Group cover is convenient but usually tied to your job: it can disappear when you leave, often when buying individual cover is harder, and a 'one or two times salary' benefit is rarely enough on its own. Treat it as a base layer, not your whole safety net.