WHAT IS GROUP LIFE INSURANCE?
Group life insurance as part of a comprehensive benefits package should:
- Help attract and retain high-caliber employees
- Give businesses a tax-deductable business expense
- Use group buying power to secure competitive premium rates
In business, one thing stays the same: companies are in business to generate profit, gain a competitive edge, prosper and grow.
You may feel you are operating in a benefits environment that is significantly out of balance – hampering your ability to achieve these objectives, straining your resources and affecting profitability.
Group life insurance is typically offered to you as a benefit through your employer or membership in an association. It can be an important supplement to other insurance policies you own, at a reasonable cost.
Factors that distinguish group life insurance from individual insurance policies include:
- Guaranteed coverage amounts. Usually group life policies offer a certain amount of guaranteed coverage, either a multiple of your salary or a fixed amount. This means you won’t have to answer questions about your health to receive the coverage. For amounts of coverage beyond the guaranteed amount, you may need to answer a few health questions and provide details as requested. Even if the amount of coverage you’re requesting requires a medical exam, it’s typically a much simpler process than the full physical usually required for an individual insurance policy.
Insurance underwriters use what is known as an experience approach when assessing the risks involved with a group life insurance policy. That means that rather than depending on your individual lifestyle habits and health factors, they group people together, by occupation or avocation, and set rates based on the risk of the group as a whole.
- Administration and billing systems are designed for groups which means less paperwork for your employer or association and better service for members. The insuring company typically handles the details of who in the company or group is covered and for what amount. It may also handle complete administration of the policy, simply providing reports to the employer or association about enrollees and claims. The company issues a life insurance policy to the employer or association – the indivduals insured under the policy typically receive certificates of insurance, which outline their rights under the policy.
- Payment is often through electronic funds transfer or payroll deduction. Convenient billing makes paying premiums painless. You won’t have to worry about writing out a check every month.
- Coverage is often portable or convertible. When you leave the group for whatever reason, you can often keep your coverage. You always have the option to convert your policy to an individual policy with the issuing company.
Group Term Life Insurance
A cornerstone of your financial security
Everyone has different needs when it comes to insurance protection. As your personal and financial obligations grow, so does the need for life insurance protection. When you marry, buy a home or have children, you need an affordable, flexible way to protect the lifestyle you've built.
This information is meant as a general guide to life insurance only – it doesn’t refer to a particular plan offered by Minnesota Life.
What does term life insurance provide?
Term life insurance provides protection for a specific period of time. It pays a benefit only if you die during the term. There is no cash value buildup in a term life insurance policy. Group Term Life insurance provides a base level of protection that can be enhanced by personal savings, individual life insurance and Social Security benefits. Basic coverage provided as an employee benefit often costs you nothing. As with all life insurance, the death benefit is paid income tax free to your beneficiary.
This benefit could provide your survivors with an emergency fund, allowing them to use individual life insurance and other funds for longer-term needs.
Supplemental term life insurance
As its name implies, this option lets you supplement your basic life protection with insurance you pay for.
Portable term life insurance
Portable term life insurance provides supplemental coverage to employees and dependents who lose eligibility under the group policy. Employees can take this protection with them if they leave the group or retire and continue coverage until age 70.
Payments can be conveniently continued through electronic funds transfer (EFT) or online payment.
Family status changes often allow you to increase coverage
When you experience a family status change, many group plans allow you to increase in your coverage, or your spouse or child coverage. Often, there will be a certain amount you may increase answering questions about your health. Family status changes may include:
- marriage
- divorce
- birth or adoption
- death of dependent or spouse
- retirement
- buying a home
- a significant change in employee benefits
- going from part- to full-time employment
- the entitlement to benefits under Medicare of an employee or an employee's spouse
- a change in employment status of an employee or an employee's spouse, such as the termination or commencement of employment
Sometimes increases in coverage will require evidence of insurability. You may have to answer questions about your health, undergo a paramedical exam or see your doctor, depending on how much insurance you wish to apply for.
Group Universal Life Insurance
Group Universal Life (GUL) combines the protection of life insurance with the option to build savings through a cash value account.
With GUL coverage, you enjoy:
- Portability
If you leave the group or retire, you may take your coverage with you.
- Tax-deferred cash accumulation
Group Universal Life's cash value account provides employees the ability to accumulate cash for future needs on a tax-deferred basis. This cash value account earns interest and is accessible through loans and withdrawals.
- Group rates
The buying power of a group makes this coverage affordable.
- A way to provide retirement income
You can use Group Universal Life to start funding your post-retirement needs. The more cash you accumulate in the cash value account, the more options you will have available at retirement.Variable Group Universal Life insurance
Variable Group Universal Life (VGUL) is all about choices. It combines flexible life insurance with investment options that can be tailored to help meet your financial objectives.
VGUL offers flexible life insurance with group premiums. This means:
- It’s flexible enough to meet your individual insurance needs.
Life insurance is a key component in your financial security. Customize your death benefit or premiums to suit your circumstances as your needs change.
- It’s flexible enough to move with you.
Unlike many group plans, VGUL is portable — you may continue coverage if you leave the group or retire.
- It’s flexible enough to be affordable.
The buying power of a group makes VGUL’s coverage especially affordable.
- It’s flexible enough to provide continued coverage.
As long as you have sufficient cash value, Variable Group Universal Life’s wide range of account options offers the potential for a higher rate of return on cash value than traditional life insurance policies. You can individualize the way your policy’s cash value is invested to suit your personal financial objectives. The range of account options — from potentially lower risk, lower return to potentially higher risk, higher return — allows you to select the level of risk with which you feel comfortable.
You make the choice when it comes to account options
You decide the way your cash value is invested. Diversify your dollars among several variable subaccounts to suit your own risk and return objectives.Guaranteed Account. Net premiums can be allocated to a Guaranteed Account, invested in the general assets of Minnesota Life, which offer a guarantee of principal as well as a minimum rate of return. The interest rate and guarantees for the Guaranteed Account are based solely on the financial strength and claims-paying ability of Minnesota Life.
Variable subaccounts. A wide array of options offer the potential of more favorable returns than those offered by a guaranteed rate of return.
You may transfer cash among subaccounts or between the variable subaccounts and the Guaranteed Account (within limits) when your needs change or you wish to take advantage of investment opportunities.
Tax-deferred cash accumulation. Combined with life insurance protection, Variable Group Universal Life allows you to build your policy’s cash value tax-deferred, so you don’t pay taxes on the interest accumulated unless you withdraw more from the policy than you’ve paid in total premiums, as long as your policy is not a Modified Endowment Contract (MEC).
The tax-favored treatment of VGUL interest can have a significant impact on the cash accumulated for your long-term financial objectives, such as supplemental retirement income or college expenses. You may add to your policy’s cash value through regular premium payments to build your investment in a disciplined way. Plus, you may make lump-sum payments — in addition to your regular premiums — to take further advantage of the policy’s investment opportunities and tax-deferred accumulation. Premium contributions can be made at any time and in any amount, subject to Internal Revenue Services limitations.
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