The Cost of Group Life Insurance
Group life insurance policies tend to be less expensive than those purchased individually based on the fact that many group policies are only effective while an employee within the group is employed at that particular company.
To figure out a group rate, the insurance company will usually consider the following factors about a business:
- Number of employees within the group
- Average age of employees
- Ratio of female to male (based on the statistic that women tend to live longer than men)
- Number of smokers
- Risk-factors associated with the business
Based on the business risk, for example, a marketing firm would probably have a lower group rate than a roofing company for equivalent coverage.
Generally, group life insurance policies are "guaranteed issue," meaning that employees don't need to undergo a medical examination to be eligible. An employee who has a serious medical condition may still be a part of the group, as long as he or she is still an active worker. However, employees out on disability leave are not eligible for group life insurance until they return to work, unless they went on leave after the policy had been issued.