Life Insurance Beyond Group Coverage

Buying employer-sponsored life insurance might seem like a no-brainer.

Do you want to make sure your family can sustain financially after you die?

Of course.

Do you want to take full advantage of your benefits package at work?


Is it easier to buy life insurance through your employer than to shop the market? Yes, but is the convenience worth the inflated price? What will happen to your coverage if you change jobs?

In this article, we’ll help you better understand how group life insurance coverage works, who should and shouldn’t be buying group coverage, and how to explore life insurance options that aren’t offered through your employer.

Quick Article Guide:

1. What Is Group Life Insurance and How Does It Work?
2. Should I Buy Life Insurance Through Work?
3. If I Don’t Buy Through Work, Where Do I Start?
4. Term Life Insurance Crash Course
5. Why Work With An Independent Agent?

What Is Group Life Insurance and How Does It Work?

Group life insurance is just what it sounds like: life insurance sold to a group (usually a business but potentially a club, collective, or professional organization). With group coverage, every member of the group has the option to purchase coverage, even if they are in poor health.

Because every member of the group carries their own risk, the insurance company must determine the group’s collective risk before they can calculate each member’s individual cost of coverage. This is done by evaluating the group as a whole, from the youngest person to the oldest person, and from the healthiest person to the unhealthiest person. Once the group’s collective health is assessed, an average rate is offered to each member based solely on their age and gender.

Group life insurance does not mean that your life insurance is “connected” to anyone else in your company. You still have your own individual policy to protect your family, and these premiums are usually deducted automatically from your paycheck each pay period.

Most group life insurance policies are sold as annual renewable terms allowing the insurer to reassess your group’s risk each year. This means that the cost of your coverage will likely increase each year because, the group as a whole has aged, and presents a higher risk to the insurer.

Should I Buy Life Insurance Through Work?

If you are older and/or extremely unhealthy, group coverage might be your best option to secure a reliable life insurance policy. Perhaps you have been denied coverage in the past, making group coverage your last viable option to find life insurance. Cigarette smokers also have difficulty qualifying for life insurance outside of group coverage due to the direct correlation between tobacco and serious health problems.

On the other side of the coin, if you are young and/or relatively healthy, you’re probably going to be overpaying for group coverage. Why? Because you would likely qualify for favorable rates if you were to apply for life insurance on your own, but instead, you are paying the group rate, which factors in those who have serious ailments and/or habits that insurers frown upon (namely smoking cigarettes). We’re not saying you should judge your coworkers for driving up the cost of group coverage; it’s just the nature of this type of life insurance.

Here are the overarching benefits and drawbacks to weigh when considering group life insurance:

Benefits of Buying Employer-Sponsored Life Insurance

  • It’s easy to apply, and the employer takes care of the legwork.
  • Applicants who might otherwise be uninsurable can qualify for affordable coverage.
  • The premium comes out of your paycheck and doesn’t feel like an added expense.

Drawbacks of Buying Employer-Sponsored Life Insurance

  • Healthy applicants will pay much more for much less coverage compared to other term life insurance policies on the market.
  • Employer-sponsored policies generally provide a death benefit (money paid to your beneficiary) of 1-3 times your annual salary. This is not nearly enough to support your family, especially if there are medical expenses that precede your death.
  • Your employer owns your life insurance policy. They can stop subsidizing, raise rates, or even cancel coverage whenever they choose.
  • The days of working with one company from entry-level to retirement are largely gone. Most U.S. workers now change jobs every 5 years, and when they do, there’s almost always a probation period of several months before their new employer’s benefits kick in, resulting in a lapse of coverage.
  • The cost of your group coverage will likely increase 10-15% every year.

If I Don’t Buy Through Work, Where Do I Start?

You don’t have to choose between picking rigid group coverage or navigating the world of life insurance on your own. The best way to start shopping for life insurance is to give JRC Insurance Group a call at 855-247-9555 and speak with one of our experienced, friendly, non-salesy agents. As an independent agency, we have no sales quotas and are here strictly to help you find the policy that’s right for you.

That said, we do want to help you gain a general understanding of life insurance, so you can feel confident and comfortable when you call us. Most people who are forgoing group coverage end up buying term life insurance, which we’ll talk more about in a second. The reason term life is such a popular choice is because you can secure coverage up to retirement at very affordable rates. When I worked for a large company earlier in my career, I paid $44 every two weeks for group coverage. When I switched to term life, I paid $17 per month for a significantly larger death benefit.

Term Life Insurance Crash Course

Term life insurance ensures a death benefit at a fixed premium, for a set period of time (your term). It is ideal for many different situations, from ensuring your spouse is not left without a means to pay the mortgage after you die to providing general income protection for said spouse. Terms are usually available in 5-year increments ranging from 10 to 30 years.

Why Term Life Insurance?

Another type of life insurance, called whole life insurance, provides coverage for your entire life. However, whole life policies can be extremely difficult to understand, because they usually involve a cash accumulation account. You can learn more about cash accumulation in this article. In the meantime, we’ll just say that it’s more dangerous than advantageous, and you should be skeptical of any policy involving cash accumulation.

Term life insurance, on the other hand, gives you the same coverage you seek in a whole life policy, without the fine print and extra fees. The benefits of term life insurance include:

  • Affordable coverage
  • Flexible options
  • A fixed rate for a set period of time
  • No startup costs
  • No surrender charge
  • No hidden fees
  • The freedom to cancel or change your policy at any time

Buy Term and Invest the Difference

Many financial experts recommend term life over whole life insurance. “Buy term and invest the difference,” they’ll say—and they’re absolutely right. When you buy term life insurance, you can take the money that you would have been paying on whole life insurance and put it into stocks, bonds, or any other investment vehicle. This strategy enables you to bolster your financial leave-behind, while the cash accumulation in a whole life policy would default to your insurance company and not your beneficiary.

What Determines Your Premium?

When deciding what “rate class” to offer you, insurers look at all of the following:

  • Age
  • Height-to-weight ratio
  • Cholesterol
  • Blood pressure
  • Pre-existing health conditions
  • Medications
  • Smoking
  • Alcohol consumption
  • Family medical history

You shouldn’t try to figure this equation yourself. It’s important to work with an experienced, independent agent like JRC who can not only tell you what you need to know, but also shop multiple carriers to find you the best rates.

Likewise, you shouldn’t choose the cheapest option by default. For example, if you have a two-year-old child and are shopping for a 20-year policy to provide coverage through their college years, you might be presented with a cheaper, 10-year policy. If you buy that 10-year policy, there is no telling what your health will be like when it expires, and you could very well find yourself paying substantially more for a new policy.

Get a Medical Exam

You can get a better policy at a better rate by opting in for a medical exam. The caveat here is that if your doctor discovers an undiagnosed health issue, such as diabetes or high cholesterol, you may see higher rates and possible difficulties with getting approved. But assuming you check out fine, the medical exam is your ticket to quality, affordable coverage. Besides, you would want to know about a potentially serious health condition in the early stages so you could seek treatment, right?

Don’t Go By Advice From a Friend or Family Member

By all means, if someone you know recommends a policy or provider, you should listen. However, you don’t want to turn around and purchase the first option you learn of. Every insurance provider has 16 different rate categories based on a slew of variables in addition to the factors we’ve discussed. The best deal for someone else might not necessarily be the best deal for you.

Why Work With An Independent Agent?

Oftentimes, people think only of the big-name insurance companies they already receive home and/or auto insurance through. The problem with going to your auto insurance agent and asking about “bundling” with life insurance is that the agent is not able to see the many options out there for life insurance; they can only sell through their employer.

Meanwhile, JRC Insurance Group has the freedom and resources to shop more than 40 top-rated carriers. Whether you’re looking for term life insurance, whole life insurance, or permanent life insurance, we can help you go beyond group coverage to secure better protection for your family at a better price. Give us a call today, toll-free at 855-247-9555, or request a free quote online using the button below.

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