Group Life Insurance

The Dangers of Group Life Insurance

Group life insurance is usually offered by companies to their employees. The rates of this type of policy varies; some have a £5,000 policy for all employees, while there are those that may provide up to 3 times of the employee’s salary. Whichever policy is offered by one’s employer, it is necessary to take extra care in taking out this type of life insurance policy as there is a big possibility of paying more than what one actually should.

How It Works

The first thing to understand about group life insurance is that it is “band rated.” This means the rates are dependent on an employee’s age. Those aged between 21 and 25 will pay a lower premium than those in the 26-30 age bracket. The rate continues to rise as individuals reach older age bands which are in 5-year intervals.

However, the problems start coming in when one reaches the age of 51. At this point, policy holders will need to pay a considerably higher amount than he had to in previous years.

Life Begins After 50

At this point, there are a lot of factors that will affect the rate one will need to pay for the insurance policy. The policy holder will need to answer a number of questions. Is he healthy? Does he smoke? Is he overweight? These are just some of the queries insurance companies will have before they decide on the premium’s rate. Naturally, people that are “less healthy” should expect to pay more. In some instances, group life insurance rates may even become more expensive than taking out some sort of personal life insurance policy.

Wait, There’s More!

Another important thing to be wary of is the structure of one’s company. This includes the number of employees in the company. Small companies, especially those with less than 10 employees, will definitely be given a higher rate. Moreover, if there is an instance of death in the company, employees are sure to expect the effects on their premiums. In an attempt to get back the money they spent to compensate for the death of one of the employees, insurers will likely increase the rate of the premiums for other policy holders in the company.

The best time to apply for group insurance is when one begins working for a company. At this point individuals are sure to be eligible and some employers even have a guaranteed issue plan which means that applicants cannot be declined by insurance companies. GP