Group Life Insurance
Find the Best Group Life Insurance for Your Client
Life insurance products are a great way for your clients to plan for the future. In many cases, life insurance is the most cost-effective option to guard against the repercussions of an unexpected death of a loved one or business partner. It also functions as a valuable asset for retirement and estate planning. When properly managed, life insurance provides peace of mind for your client and their loved ones.
Finding the right life insurance policy for each client’s situation is not simple. Term, universal, whole, and group insurance are the four primary types of life insurance policies. Each of these types of insurance policies has distinct advantages and disadvantages. Group life insurance is a very common consideration for both businesses and their employees.
What is group life insurance?
Group life insurance is a type of life insurance product offered by an employer to employees. In other words, a business or other employer purchases a life insurance policy and extends coverage to its employees. Group life insurance coverage is commonly included alongside other employer-sponsored benefits, such as health insurance, and is often inexpensive or even free for employees. However, group life plans do not generally require underwriting. While they are affordable, they offer limited death benefits and coverage, making the relative cost sometimes higher than fully underwritten, individually-owned life insurance coverage. Because of this, a common practice is for an employee to purchase an individual policy in addition to the group benefits offered by their employer.
How is group life insurance different from other life insurance policies?
Group life insurance is typically offered as a term life policy that is renewed each year through an open enrollment period. Coverage under the policy is tied to employment, and death benefits are only conferred if the employee dies while covered. Furthermore, if an employee leaves for any reason, whether they quit, retire, or are terminated, they lose coverage.
Group life insurance also lacks the benefits of universal life insurance and whole life insurance, such as a cash value saving component and guaranteed coverage for life. Because of this, group life insurance should be treated more like a benefit than a comprehensive life insurance policy.
What are the benefits of group life insurance?
For employees, the major benefit of group life insurance is that coverage is often offered free of charge as part of their benefits package. Similar to employer matching on 401(k) contributions, group life insurance can provide additional peace of mind at no cost.
For employers, group life insurance coverage can be an attractive benefit to offer prospective employees.
Is group life insurance right for my client?
If your client is considering opting into a group life insurance plan offered by their employer, there are two situations where it may be right for them. The first, as mentioned earlier, is when coverage is a free benefit. In that case, they should still consider purchasing an individual life insurance plan and treating the group life plan as supplemental coverage.
In a situation where an employee has to accept the group life insurance plan due to the cost, it is not likely an ideal purchase and they should consider obtaining coverage elsewhere. Quite often we find rates similar to or lower than the employer coverage rate, especially for younger employees. In those cases, they own the coverage personally. One exception is when the employee is otherwise uninsurable due to personal or health history. Group life may be their best option to get coverage.
For employers, group life insurance is often purchased alongside other benefits and can be a key part of attracting and retaining employees. If your client is an employer, you should recommend they consider group life insurance plans during their annual benefits review, which usually takes place 90 days before their health insurance plan renews.
Frequently asked questions about group life insurance.
What happens to group life insurance coverage when your client leaves their job?
If your client leaves for any reason, whether they terminate from a job, retire, or quit, their coverage expires. There is often an option built in to allow a retiree to converge into an individual policy. However, it is often expensive and generally a worse purchase than a separate individual plan.
How much group life coverage should you have?
Employees should take as much coverage as the company is offering free of charge. For employers, the coverage amount is dictated by the number of enrollees. The price is determined by a census that includes factors like wages, hours, and gender.
Do group life insurance plans have a cash value?
No. Cash value is a feature of universal life insurance and whole life insurance.
How do I find the best group life insurance policy for my client?
The purpose of life insurance is different for every client. This is especially true for group life products. Your client may be an individual considering a policy offered by their employer or a company seeking to purchase a group policy for their employees. When working with an employer, consider all factors including the business size, the budget, the enrollment schedule, and other key benefits. Your client may need help conducting a census, which looks at the number of employees, how much they work and earn, and other factors.
An insurance brokerage agency can help you and your client work through all these details and more. A broker can do the shopping for you and select from a wide range of products and carriers that meet your clients’ needs. Working with a life insurance brokerage agency can be the difference between purchasing a policy tailor-made for your client or an inferior product that will not provide the needed coverage.
How do I find the best group life insurance broker?
When shopping for group life policies, you will want to seek out insurance brokerage agencies that specialize in benefits. You can start by simply asking around in your network for referrals. You could also connect with NAIFA, a highly trusted nonprofit association for insurance brokers and financial advisors.
You can also do your research by prospecting several group life insurance brokerages in your area. We recommend looking for these qualities:
Industry knowledge. Do they understand the benefits market?
Responsiveness and attentiveness. Are they knowledgeable regarding the products and solutions available? EMG calls this the analysis and design phase.
Back-office support. What happens after an application is submitted? EMG handles the implementation. This is a critical and often overlooked service, but it may be critical to get the right offer.
A good team instead of just a good salesperson. Make sure that the service is as good as the pitch.
Investing in the business. Do the owners invest back into the agency or focus on paying themselves?
You can also learn a lot about the brokerage by calling them up and asking pertinent questions, such as:
- How long have you sold group life insurance?
- Have you had any complaints with the state?
- Who are your primary carriers?
- What are the carrier ratings?
- What types of products are the affiliate carriers selling?
Do your homework. Most importantly, visit the agency. Do an onsite visit and speak with the owners in person.
EMG can help.
As a brokerage general agency, EMG handles everything from submission to commission. Our relationships with over 30 carriers allow us to help choose the best carrier for your client based on the purpose of coverage, underwriting obstacles, and type of product. We will walk you through the process and have the ability to tailor solutions to the unique needs of each client.
We will take your client’s census annually, review their current policies, and shop the market to come back with a competitively priced benefit package tailored to their needs. We provide group insurance to over 900 businesses every year and continue to grow and develop our process. Our dedicated sales team offers customized proposals and case designs for each of your clients, along with product alternatives and comparisons. You will have access to a dedicated case manager that will follow your case from submission to final approval and placement.
This highly personalized approach gives us the ability to tailor solutions to each client. Connect with us by phone, online, or in-person, or schedule a consultation with your sales director today on how to grow your business.