Group vs. Term Life Insurance: Which is Better?

Shawn Plummer

CEO, The Annuity Expert

Compare group life insurance provided by employers with term life insurance purchased privately on an individual basis.

Term life insurance

Term insurance lasts for a specific amount of time, called a term. You choose the amount of money paid out to your beneficiaries if you die before your term ends. If you die after your term ends, no death benefit is paid.

Life insurance premiums are typically 10-15 times less expensive than permanent life insurance. As a result, it is a reasonable option for many people.

A term life insurance policy may be a smart choice for individuals who want cost-effective coverage for a set period of time without the higher premiums associated with a cash value policy.

Group Vs. Term Life Insurance

Employer-sponsored (group) life insurance

Group life insurance is a policy that covers a group of individuals or their employees under one contract. A company-sponsored life insurance plan may already cover you. However, because this sort of coverage only provides a fraction of the coverage you require, many people buy an individual term life insurance policy to supplement their work’s benefits.

Group vs. Term Life Insurance: Pros and Cons

Group Life Insurance Pros

  • Convenient– Sign up at work, premiums get deducted from your paycheck
  • Guaranteed coverage – No questions, no tests, no underwriting
  • Free – Generally free, regardless of age, health, etc. Spouses are included sometimes included.

Group Life Insurance Cons

  • Work-Related Restrictions – Coverage typically requires “active” working status. If you become ill and unemployed before dying, the insurance may not pay.
  • Not Portable – You can’t take the policy with you if you leave the employer. The following employer may not offer life insurance. You’ll have to apply for new coverage at an older age, which is more expensive.

Term Life Insurance Pros

  • Potentially Lower Costs for Healthy – Coverage depends on your circumstances via medical underwriting. Healthy people typically experience significantly lower premiums than “Supplementalinsurance
  • Level Premiums – Term policies lock in the premium for a fixed period. 
  • Portable – Since this policy is not connected to your employer, it is portable, providing continuous coverage. 
  • No Work-Related Restrictions – An “Individual” insurance policy is more likely to pay out benefits than employer-provided coverage. 
  • Multiple Options – You can choose from a large selection of term policies that offer various special features and riders that provide flexibility.
  • Underwriting process – Policies are, typically, fully underwritten, meaning that your policy will be based on your health and other factors. Therefore, there will be more questions than for the “Supplemental” insurance and may include some medical tests.

Term Life Insurance Cons

  • Underwriting process – Policies are, typically, fully underwritten, meaning that your policy will be based on your health and other factors. Therefore, there will be more questions than for the “Supplemental” insurance and may include some medical tests.
Group And Term Life Insurance

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Shawn Plummer

CEO, The Annuity Expert

Shawn Plummer is a licensed financial professional, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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