A group term life insurance policy is when the company sets up a single policy that covers all eligible employees. Instead of each employee having to apply for their own life insurance,
Why do teams love group term insurance plans? They’re accessible, usually very affordable (often free for basic coverage!), and since everyone is included, there’s less red tape to jump through.
There are some key differences you’ll want to know. We’ve broken it down in the table below:
Feature | Group Term Life Insurance | Individual Term Life Insurance |
Policy Owner | The company or organization | You (the individual) |
Enrollment | Easy sign-up, usually no health questions or exams | Usually needs an application and sometimes a medical exam |
Cost | Usually lower premiums, with the company often paying all or some of the cost | You pay the whole premium, which can be higher based on your health and age |
Coverage | Often set at a multiple of your salary, like 1x or 2x, or a set flat amount | You pick the coverage amount that suits you |
Portability | Ends when you leave your job—unless you convert it (more on that below!) | Stays with you, no matter where you work |
Typical eligibility rules include:
Setting these rules early makes the plan fair for all.
This is where group term insurance keeps things simple. Most businesses use one of these two approaches:
Lots of plans let you buy even more coverage on top of the basic policy. It’s called a “supplemental buy-up.” Should you go for it? Let’s help you decide:
Why it might be a good idea:
Things to keep in mind:
If you’re changing jobs or retiring, you’re probably wondering, “what happens to my coverage?” Usually, group term life insurance ends when you leave, but many policies let you “convert” your group coverage into an individual policy; no medical exam needed!
Here’s what you should know:
A conversion is a valuable option if you need coverage and are worried about your health or insurability at your new job or in retirement.
