Group Term Life Insurance: A Safety Net for Employees and Their Families

Life insurance is one of the cornerstones of financial security, providing peace of mind to individuals and families in the event of a tragedy. One type of life insurance that many companies offer to their employees is Group Term Life (GTL). In this article, we will explore more on GTL, including its benefits, common exclusions, and its importance.

What is Group Term Life?

GTL is a type of life insurance policy that provides coverage to a group of people—typically employees of a company—under a single plan. This policy premium is usually paid by the employer, and employees are covered for a specified term (typically one year), with the option to renew the policy annually.

Unlike permanent life insurance, which lasts for the life of the insured (as long as premiums are paid), Group Term Life insurance is temporary coverage that only lasts for a specific period. If the insured employee dies within the coverage period, the beneficiary (usually a family member) receives a lump sum payout, known as the death benefit.

The coverage amount in Group Term Life insurance is often based on a multiple of the employee’s salary, such as one to three times the employee’s annual salary. It can also be based on a fixed coverage limit (i.e. $50,000, $100,000 up to $1,500,000).

Benefits of Group Term Life Insurance

GTL offers several key benefits, both for employees and employers. Here are some of the most notable advantages:

1. Affordable Coverage

Since GTL is a bulk policy for employees, premiums are generally much lower than individual term life insurance policies as the insurer is covering a group of people instead of an individual. Employers often pay for all or most of the premium cost, making it an affordable way for employees to get life insurance coverage.

2. Ease of access

Unlike individual life insurance policies, which often require a medical examination and health disclosures to determine eligibility and premiums, GTL typically does not require any medical underwriting as long as the sum assured is below the Free Cover Limit (FCL) / Non-Medical Limit (NML). This limit provides automatic coverage to employees up to a specified limit without requiring medical underwriting.

This ensures employees, including those with pre-existing conditions or poor health, can access protection without the risk of being declined. The FCL/NML streamlines enrolment, promotes equity among employees, and lowers costs, making life insurance more inclusive and affordable. By removing medical barriers, it encourages higher participation rates, enhances employee satisfaction, and supports organizations in offering a comprehensive and accessible benefits package.

3. Employee Retention and Benefits

Offering GTL is a way for employers to demonstrate their commitment to the well-being of their employees. It enhances the overall employee benefits package, contributing to employee retention and job satisfaction. A comprehensive benefits package is a key factor in attracting and retaining top talent.

4. Coverage for Employees' Families

In the unfortunate event that an employee passes away, GTL provides a financial safety net for the employee’s family. The death benefit can help cover funeral expenses, debts, and other financial obligations, giving the family some financial relief during a difficult time.

Common Exclusions in Group Term Life

Just like most other types of insurance available, GTL does come with some common exclusions. Here are some examples where a death benefit will not be paid under group term life:

Suicide (typically within the first two years of the policy)
Acts of war
Terrorism
Illegal activities
Substance abuse

Conclusion

Group term life insurance is more than just a policy—it is a safety net for employees and their families. By including this benefit in a comprehensive package, employers can provide critical financial protection, foster loyalty, and support their workforce's well-being. With its lower premiums and easy access, it is an attractive benefit for individuals and an important tool for employers seeking to enhance their benefits packages. If you are looking for Group Term Life or any other forms of employee benefits, please do not hesitate to contact us today.