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Group Term Life Insurance

TeamAckoMay 13, 2024

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.




Advantages and Disadvantages of Group Term Life Insurance 



Cost-effective It is usually more affordable than individual life insurance policies.

Limited coverage Typically offers lower coverage amounts than individual policies.

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

Limited customisation They often have limited customisation options, making it difficult to tailor the policy to your specific needs.

No medical exams Most of these policies do not require a medical exam.

Loss of coverage You may lose your cover if you leave your employer or the group sponsoring the policy.

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

No cash value These do not have a cash value, meaning you cannot borrow against the policy or receive any returns on your premiums.

How does the Group Term Life Insurance Work?

Here's how it typically works:

  • Group Coverage: The employer or organisation purchases a policy from an insurance company to cover a group of individuals, such as employees or members of an association.

  • Coverage Amount: The employer typically determines the coverage amount, often based on a multiple of the employee's salary or a flat amount.

  • Premiums: The employer usually pays the premiums for the coverage, although in some cases, employees may contribute to the cost through payroll deductions.

  • No Medical Underwriting: One of the significant advantages of group term life insurance is that it often does not require individual medical underwriting. 

  • Death Benefit: In the event of the death of an insured employee, the insurance company pays out a death benefit to the beneficiary designated by the employee. This benefit is usually a lump sum payment and is typically tax-free to the beneficiary.

  • Coverage Period: The policies are usually renewable on an annual basis. However, coverage typically ends when the employee leaves the company or when they retire, depending on the policy terms.

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.

  • Employees

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.

  • Individuals

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.

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. The employee is responsible for paying 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 pass away before it is fully repaid.

Wholesale Group Term Life Insurance This policy is 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.

Explore ACKO Life Flexi Term Plan

The ACKO Life Flexi Term Plan is a unique plan with unmatched flexibility, designed for individuals seeking to safeguard their loved one's future. This plan stands out with its innovative features, ensuring comprehensive coverage. Here are some key advantages of the ACKO Life Flexi Term Plan:

Adaptable Sum Assured Adjust the sum assured according to their evolving financial requirements and life stages.

Flexible Policy Tenure Choose a policy duration that aligns with their long-term financial goals and family needs,

Valuable Riders Enhance coverage with valuable riders designed to address various risks and enhance protection.

Flexible Payout Options  Flexibility to choose from various payout options.

Affordable Premiums Enjoy comprehensive coverage at affordable premiums.

Easy Claim Process A hassle-free claim settlement process, offering peace of mind.

Learn more 

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 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 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 typically involves 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, they are 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 has specific terms and conditions determining when and how benefits are paid. 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.

6 Key Factors Affecting Group Term Life Insurance

Group-term life insurance is influenced by several factors, including:

  • Group Size: The rates may vary depending on the size of the covered group. The economies of scale that larger organisations enjoy frequently result in cheaper premiums per member than smaller ones.

  • Age and Gender Distribution: Premiums are affected by the group members' average age and gender distribution. Younger people and women often have cheaper premiums because of their decreased mortality risk.

  • Occupational Risk: The type of work or industry a group is in may impact premiums. Due to the higher risk of accidents or fatalities, certain groups may have higher rates than others.

  • Coverage Quantity: The quantity of insurance each group member receives impacts rates. Larger rates are associated with larger coverage quantities.

  • Geographic Location: Death rates, medical expenses, and regulatory frameworks are a few examples of the variables that might affect insurance prices by area. Premiums may be higher for those residing in areas where insurance is more expensive.

  • Duration of Coverage: The premiums are affected by the duration of the coverage period. Because there is a longer time of possible risk for the insurer, longer coverage durations typically translate into higher rates.


To sum up, group term life insurance is a great choice for companies looking to give their staff members significant benefits and give themselves and their family financial stability. The option is desirable due to its price, accessibility, and convenience; group size, demographics, and coverage terms influence rates. Employers may provide coverage that meets the demands of their workforce and promotes employee security and well-being.

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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