What is group term life insurance?

You can enroll in coverage when you start a new job or during open enrollment. Most group plans don't require a medical exam, which makes it easy to qualify for basic coverage. Group term life insurance provides coverage to employees while they remain employed.

Employers usually pay for basic coverage, which is often a set amount like $50,000 or calculated as one or two times your annual salary. According to the Internal Revenue Service (IRS), if your group term life insurance coverage exceeds $50,000, you may need to pay taxes on the amount above $50,000. These payroll taxes are for Social Security and Medicare, not regular income taxes.

If you want more coverage, your employer may offer supplemental life insurance to increase your death benefit. Employers typically deduct premiums for supplemental coverage directly from your paycheck.

If you die while covered, the policy pays money to your life insurance beneficiaries. Beneficiaries are usually family members or loved ones, but you can also choose trusts, charities, or organizations you care about. Keep your personal information and beneficiary selections updated, especially after major life changes like marriage, birth, or divorce.

Your coverage typically ends when you leave the company or retire. However, your company may allow you to "port" your group term life insurance policy into an individual policy. Porting a policy lets you keep your coverage, but your premiums may be higher. It's important to review the costs and terms to ensure this option works for you.

• Affordable or free coverage: Employers generally pay for basic coverage, making it an inexpensive way to get life insurance for employees.
• No medical exams: Basic coverage typically doesn't require a health check and is often guaranteed issue, making it a good option for those who may struggle to qualify for affordable term life insurance.
• Easy enrollment: You can sign up when you start a new job or during open enrollment.
• Peace of mind: Group term life insurance helps protect your family financially if you pass away.

• Coverage ends with your job: Your coverage stops when you're terminated, leave the company, or retire, unless you can port or switch to an individual policy (which often costs more).
• Limited coverage amounts: Employers usually cap basic coverage at a set amount (e.g., $50,000) or a multiple of your salary. This may not be enough for large financial needs.
• Tax implications: You may need to pay taxes on coverage above $50,000.
• Not customizable: Group term life insurance plans offer fewer options compared to individual policies.

Supplemental life insurance adds extra coverage to your basic group term life insurance plan. You might consider it if:

• Your employer's basic coverage isn't enough
• You have short-term financial needs, like young children
• You don't qualify for individual term life insurance because of health issues
• You plan to stay with your employer for a long time

Individual term life insurance gives you coverage that isn't tied to your job. It lasts for a set time, such as 10, 20, or 30 years. You may consider it if:

• You have lifelong dependents, like children or aging parents
• You have large financial responsibilities, like a mortgage or debt
• You want customization options or riders
• You want coverage that stays with you no matter where you work

Learn more about when multiple life insurance policies might be the right choice for you.