Group Term Life Insurance: What It Is, How It Works, Pros & Cons

Group term life insurance is a type of life insurance that is purchased by an employer on behalf of its employees. The employer pays the premiums, and the employees are the beneficiaries of the policies. Group term life insurance is a popular choice for employers because it is a relatively inexpensive way to provide life insurance coverage for their employees.

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.