Employee Life and Disability Insurance

Life Insurance

Life insurance can be divided into two categories: employer-provided group policies and individual policies.

Life insurance of any kind can provide financial protection for families, but individual and employer-provided policies have definite differences.

Employer-Provided Group Life Insurance

Group life insurance is a common offering in employer benefit packages. Employers often offer basic life insurance coverage that is equal to an employee's annual base salary or a defined benefit amount: for example, $50,000.

Most group life insurance plans offer term life coverage. Some states require that insurers include a provision in the group life plan that allows employees to convert their life insurance policy from term to whole life when leaving the job. The individuals then pay premiums directly to the insurer.

Group life insurance is an economical way to obtain life insurance coverage since individual life insurance policies can be expensive.

Special Provisions

Many group life insurance plans include special provisions such as accelerated benefits. Accelerated benefits allow the insured to access benefits early in the event of a terminal illness. Accelerated benefits are commonly referred to as "living benefits." A waiver of premium for disability allows the insured to avoid paying premiums if totally disabled for a certain amount of time. The accidental death benefit pays an increased benefit if death of the insured is the result of an accident.