Group life insurance is often provided for individuals who are employed by a company that offers life insurance coverage or to those who are members of a group that offers group life insurance coverage. Group life insurance is provided to members of a group that qualifies for life insurance. Most types of group insurance are through an employer. A group cannot be created for the sole purpose of purchasing insurance. Group insurance has an application process but the underwriting process is different for group life insurance than it is for individual life insurance.
Groups that Typically Offer Life Insurance
Typically, if a person has a group life insurance plan then in most cases it is offered by an employer as an employee benefit. Some individuals may acquire group life insurance through being a member of a union or a member of an association. In addition, some people that take part in a group life insurance plan are those who owe funds to an automobile financing company.
Insurability Requirements with Group Life Insurance
Generally, with group life insurance the applicants do not have to prove insurability. Proving insurability is equivalent to proving good health. When an applicant proves that they are insurable, they are proving to the insurance company that they are not a high risk for the insurance company to insure. Group policies are combined with many types of people into one policy and those individuals do not have to prove insurability because the overall size of the group makes the risk worth while; some individuals will be at a higher risk but others will not.
Underwriting Guidelines Working with Group Life Insurance
The underwriting guidelines for group life insurance are much the same as the insurability requirements. Underwriters take into consideration the size of the group as well as the turn over. A group census, or statistical information for each individual, is taken into evaluation to determine the overall risk of the group and that is how the rates are determined. The underwriter does not individually assess the applicants as they would if the policy were an individual plan and not a group policy.
Keeping a Group Policy
Since the group policy is based upon affiliation with a group, the insured person will likely lose the coverage if the insured person is no longer a member of the group. Some group plans include a provision that allows the insured individual an opportunity to continue the life insurance policy after leaving the group. If the member exits the group and wants to keep the life insurance it is important to make sure what the allotted time frame is to make that decision because once that time period has lapsed the policy will no longer be available without reapplying and proving insurability.
Group life insurance is overall one of the least expensive forms of life insurance. To qualify for group insurance an applicant simply has to be a qualified member of the group offering the coverage and they must complete and submit the required paperwork. The applicant does not have to prove insurability or be subject to an underwriting process. If the insured member of the group chooses to exit the group, they may lose the policy altogether; sometimes there is a provision in the plan that allows them to opt to keep the policy.