GROUP LIFE 101

BE A PART OF SOMETHING BIGGER THAN YOURSELF.

GROUP LIFE INSURANCE

Group life insurance is a

plan that provides coverage
to more than one person,
under one policy.
GROUP LIFE INSURANCE

Group life insurance is

usually written for
employer-employee groups.
GROUP LIFE INSURANCE

Group life insurance is also

usually written as annually,
renewable term insurance.
GROUP LIFE INSURANCE

In group life insurance, evidence

of insurability is usually not
required if participant enrolls
during the open enrollment
period. Participants under the plan
do not receive a policy, nor do
they own or control the policy.
GROUP LIFE INSURANCE

Instead, participants receive

CERTIFICATE certificates, indicating that
OF COVER
they are included in the
coverage.
 NON-CONTRIBUTORY
When an employer pays all of
the premiums, the plan is
referred to as a non-
contributory plan.
Under a non-contributory
VS.
plan, insurance companies
will require that 100% of the
eligible employees be
included in the plan.
CONTRIBUTORY
When the premiums for
group life insurance are
shared between the
employer and employees,
the plan is referred to as a
contributory plan.
Under a contributory plan, an
insurance company will
require that 75% of eligible
employees be included in the
plan.
FEATURES OF GROUP LIFE INSURANCE

In most cases, the employee’s

company, who is the master
policyholder, selects the type
of insurance coverage, which
may be either permanent or
term insurance.
FEATURES OF GROUP LIFE INSURANCE

Group life policies must

contain a conversion provision
that allows individual insured
members to convert to an
individual plan without
evidence of insurability.
FEATURES OF GROUP LIFE INSURANCE

Most group conversion

provisions require that
the conversion be made
to a whole life policy, as
opposed to a term policy.
ELIGIBLE GROUPS

Group life insurance plans may

be sponsored by employers,
labor unions, credit unions,
associations and any other
organization formed for a
reason other than purchasing
insurance.
ELIGIBLE GROUPS

Insurance companies may

establish a required minimum
number of persons to be
insured under a group life
insurance plan.
ELIGIBLE GROUPS

If the employer pays all

premiums for a group life
insurance policy, all employees
must be included in the plan,
unless they are individually
uninsurable according to the
insurer, or they refuse coverage
in writing.
GROUP LIFE CHARACTERISTICS
 GROUP LIFE CHARACTERISTICS

Group underwriting
differs from that of
individual life insurance.
 GROUP LIFE CHARACTERISTICS

Evidence of insurability is
usually not required of
each participant unless
he or she is enrolling for
coverage outside the
normal enrollment
period.
 GROUP LIFE CHARACTERISTICS

Instead, the underwriting

of group life insurance is
based on the various
group characteristics.
 GROUP LIFE CHARACTERISTICS

Another unique aspect

of group underwriting is
that the cost of the
coverage is based on the
average age of the group
and the ratio of men to
women.
 TAXATION OF GROUP LIFE PLANS

With group life insurance,

the premiums that an
employer pays for life
insurance on their
employees are tax
deductible to the employer
as a business expense.
 TAXATION OF GROUP LIFE PLANS

Any time a business is the

named beneficiary of a life
insurance policy, or has a
beneficial interest in the
policy, any premiums that
the business pays for such
insurance are not tax
deductible.
 TAXATION OF GROUP LIFE PLANS

When a business pays the

premiums for any of the
following arrangements, the
premiums are not deductible:
• Key Employee Insurance
• Stock Redemption or Entity
Purchase Agreement
• Split Dollar Insurance
OTHER FORMS OF GROUP LIFE INSURANCE

There are other forms of life insurance that are

written on a group concept, including the following:
1. Franchise life insurance
2. Group credit life
3. Blanket life insurance
OTHER FORMS OF GROUP LIFE INSURANCE

Franchise Life Insurance

A Franchise Life Insurance is a plan for
micro business (less than 10 employees)
that are too small to obtain group
coverage. Participants are usually
solicited from the workplace with the
employer’s approval. Also called
Wholesale Life Insurance, the plan issues
participants with an individual contract
with individual underwriting and the
same provisions.
OTHER FORMS OF GROUP LIFE INSURANCE

Group Credit Life

Group Credit Life is a type of decreasing term insurance
issued to creditors to cover the lives of people who have
outstanding loans.
OTHER FORMS OF GROUP LIFE INSURANCE

Blanket Life Insurance

Blanket Life Insurance covers a group of people exposed to a common
hazard. Examples:
1. Airline passengers on a commercial flight
2. School covering students, teachers or employees in an outing
3. Religious, recreational or civic organizations covering its members
while participating in its sponsored activities
4. Sports team covering members while participating on team
competitions
5. Volunteer firefighters
OTHER FORMS OF GROUP LIFE INSURANCE

Blanket Life Insurance

No one is specifically named on the policy or
furnished with certificates of insurance.
OTHER FORMS OF GROUP LIFE INSURANCE

Blanket Life Insurance

They are covered only for the specific hazards
stated in the policy.
GROUP LIFE 101
BE A PART OF SOMETHING BIGGER THAN YOURSELF.