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Group Term Life Insurance

TeamAckoNov 7, 2023

Group Term Life Insurance (GTLI) is a type of coverage that you can purchase through your employer or another group, such as an association. It is often referred to as "group" or "employer-paid" because the employer pays for it as part of your compensation package. In this article, we'll explain what this plan all about and how it works so you can decide whether this type of coverage might be right for you.

Group Term Life Insurance



Who should get Group Term Life Insurance?

Group Term Life Insurance is an affordable way for an organisation to help employees who may not otherwise be able to afford the cost of coverage on their own. Here’s who should get it.


In addition to providing them with financial security in case of death, the Group Term Plan can also help attract and retain the best talent by showing that the employers care about their employees' well-being and providing them with a valuable benefit.


Group Term policies are also available as individual plans where one person buys coverage for others (such as family members). This plan allows those who cannot or do not want to purchase individual policies to receive protection against accidents or illnesses that may affect multiple people in the same household.

How to get Group Term Life Insurance

If you're interested in acquiring a Group Term Life Insurance policy, here's what you need to know

Check if your employer offers it

Many employers offer this plan as part of their benefits package. It's usually pretty affordable and easy to get through the workplace. 

Compare prices from different providers

The cost of each plan usually varies depending on factors like how much coverage is needed and where the policyholder lives (this affects mortality rates). To get an accurate picture of what each policy costs, look at quotes from multiple providers before making any decisions or signing up with any company.

Consult your employer's HR department

If your employer offers a Group Term Plan, you'll likely need to complete an enrollment form or application through the HR department. This will typically involve providing personal information, such as your name, age, and health status. In addition, you will select the amount of coverage you want.

Consider additional coverage

While employer-provided insurance plans can be an ideal starting point, it's often limited in terms of coverage amount. If you have dependents or other financial obligations that require a larger safety net, you may want to consider purchasing additional coverage through a separate policy or rider.

Understand the policy's terms

Like any insurance policy, the group plan comes with specific terms and conditions that determine when and how benefits are paid out. Before signing up for a policy, make sure you understand its terms. This includes any exclusions or limitations that could impact your benefits eligibility.

Review and update your coverage regularly

 Your life circumstances may change over time, impacting your insurance needs. It's critical to review your coverage periodically (e.g., once a year or after a major life event) to ensure that it still meets your needs and is aligned with your financial goals.

Advantages of Group Term Life Insurance

Here are the advantages of opting for this plan.


It is usually more affordable than individual life insurance policies.

Guaranteed acceptance

This type of policy usually offers guaranteed acceptance, meaning you can't be denied coverage based on your health.

No medical exams

Most of these policies do not require a medical exam.

Employer contribution

In most cases, the employer pays for a portion or all of the premiums, making it a valuable employee benefit.

Disadvantages of Group Term Life Insurance

Here are the disadvantages of opting for this plan.

Limited coverage

Typically offers lower coverage amounts than individual policies.

Limited customisation

Often have limited options for customisation, making it difficult to tailor the policy to your specific needs.

Loss of coverage

If you leave your employer or the group sponsoring the policy, you may lose your coverage.

Age limits

Some of these policies have age limits that may not provide coverage for older individuals.

No cash value

These do not have a cash value, meaning you cannot borrow against the policy or receive any returns on the premiums you pay.

Types of Group Term Life Insurance

Here are the different types of Group Term Life Insurance plans.

Employer-sponsored Group Term Life Insurance

Basic Group Term Life Insurance

Employers provide this type of coverage as a standard employee benefit. The employer pays the premiums, and the coverage amount is usually a multiple of the employee's salary.

Supplemental Group Term Life Insurance

This is additional coverage employees can purchase on top of their basic insurance policy. It is the employee's responsibility to pay the premium for this coverage.

Non-Employer Sponsored Group Term Life Insurance

Association Group Term Life Insurance

This type of coverage is offered through an association or organisation. Members of the group can purchase coverage at a discounted rate.

Affinity Group Term Life Insurance

This is similar to Association Group Term Life Insurance, but it is typically offered to members of a particular affinity group, such as a credit union or alumni association.

Credit Life Insurance

This type of coverage is offered by lenders to borrowers. The policy pays off the borrower's debt if they pass away before it is fully repaid.

Wholesale Group Term Life Insurance

This is a policy sold to a group, such as a corporation or labour union, at a discounted rate. The group then distributes coverage to its members.

What does Group Term Life Insurance cover?

Group Term Life Insurance is a type of coverage that protects you and your family in the event of death. It pays out an amount to your beneficiaries if you die during the policy's term (usually one year).

  • The death benefit can be used for any purpose, but it's usually used to pay off debts or help with funeral expenses. 

  • The living benefit is similar to how disability insurance works: if you become unable to work due to illness or injury, your group plan will pay out until you're able to return back into the workforce again and earn enough money on your own again.

  • Accelerated death benefit allows people who are terminally ill or have an incurable condition like Alzheimer's disease to access funds from their policies early without having them taxed as income. This means they won't have as much taken away from them when they cash out their policy early!

What is not Covered by Group Term Life Insurance?

Group Term Life Insurance does not cover pre-existing conditions. It means if you have a condition that you've been getting treatment for, such as high blood pressure or diabetes, and then apply for group insurance coverage, the insurer will not pay out on any claims made due to your pre-existing condition.Here are also some other situations where an insurer may deny coverage under these policies.

  • Suicide: If someone commits suicide, their beneficiaries may not receive any benefits from the policy. This is because suicide is considered an "intentional self-inflicted injury" by insurers, and they don't want to pay out on those kinds of injuries!

  • Injury caused by dangerous activities: If you're injured while engaging in an activity that's considered "dangerous" (such as skydiving), your beneficiary won't receive any money from the policy unless it's specifically listed as covered under its terms and conditions. 

In conclusion, Group Term Insurance Plans are a valuable benefit that provides financial security for employees and their families. It's important to compare policies from different providers and understand the limitations of coverage. Depending on your situation, you may also want to consider supplemental policies or individual life insurance to ensure that you have enough coverage to protect your loved ones in case of your untimely death.

Frequently Asked Questions

Here’s a list of common questions and their answers related to Group Term Life Insurance.


Will my Group Term Life Insurance Plan be terminated if I leave my company?

If you leave your job, you may no longer be eligible for coverage under the policy offered by your employer. You may have the option to convert the policy to an individual policy or to purchase an individual policy on your own.

Can I increase my coverage amount?

In some cases, you may be able to increase your coverage amount through the employer's group insurance policy. However, this may require additional underwriting and may result in higher premiums.

Can I designate my own beneficiaries?

Yes, you can designate your own beneficiaries.

Is Group Term Life Insurance taxable?

No, the benefits are generally not taxable to the beneficiary. However, do check the latest laws regarding the applicable tax regimes.

What are some common riders available on Group Term Life Insurance policies?

In some cases, these policies may offer riders such as Accidental Death and Dismemberment coverage or Long-term Disability Coverage. However, the availability of riders may vary depending on the policy and the sponsoring group.

Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on industry experience and several secondary sources on the internet, and is subject to changes.


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