Group Term Life Insurance: What It Is, How It Works, Pros & Cons
Definition of 'Group Term Life Insurance: What It Is, How It Works, Pros & Cons'
How does group term life insurance work?
Group term life insurance works by providing a death benefit to the beneficiaries of the policy in the event of the death of the insured person. The death benefit is typically equal to the employee's salary, but it can be any amount up to a specified limit.
What are the pros and cons of group term life insurance?
There are a number of pros and cons to consider when evaluating group term life insurance. Some of the pros include:
* It is a relatively inexpensive way to provide life insurance coverage.
* It is easy to set up and maintain.
* It is a tax-advantaged way to provide life insurance coverage.
Some of the cons of group term life insurance include:
* The coverage is limited to the employee's salary.
* The coverage may end if the employee leaves the company.
* The coverage may not be portable, meaning that the employee may not be able to take the policy with them if they change jobs.
Is group term life insurance right for me?
Whether or not group term life insurance is right for you depends on your individual circumstances. If you are looking for a relatively inexpensive way to provide life insurance coverage for your family, then group term life insurance may be a good option for you. However, it is important to weigh the pros and cons carefully before making a decision.
If you are interested in learning more about group term life insurance, you can speak to your employer's human resources department. You can also contact a life insurance agent for more information.
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