Definition of Group Term Life Insurance

Video Transcript

"This is John Pinelli, financial representative, talking to you today about group term life insurance. Employers often provide their employees with group term life insurance, and what this means is they are providing term life for a specified period of time while the person is employed for maybe 10, 20 years or up to an attained age such as age 80. They're providing this coverage through some major life insurance carrier, and they are providing it to the group. Now, an important thing to remember when you are obtaining this group coverage is that the group is essentially put into a pool. They take the average age and the average health of these individuals to sort of come up with this pool. So if you're very young and very healthy and you decide to go with a group term life insurance policy through your work, chances are, you're overpaying. Whereas, if you're very old and unhealthy and you get the group term life insurance, you're underpaying. So what they're doing is they're pooling and they're taking the average of the old, unhealthy person and the young, healthy person and sort of providing a middle ground there. Oftentimes in my experience, I have found that I am able to provide individuals with more affordable, better term coverage outside of what their group plan at work provides. Now, another thing to remember about group plans at work is that they oftentimes only provide a small amount of coverage -- maybe one...typically, one to three times your income. So if you're making 50,000 dollars a year, your coverage may be somewhere between 50,000 to 150,000. Now, this can be sufficient for things like funerals, burial fees, final expenses, and maybe some debt, et cetera. But in terms of providing your family with a more significant portion of money, which could help to, say, replace your income, pay for your child's college tuition, pay off a mortgage to your house, and provide your spouse with some flexibility and some money to continue their lifestyle without making any major changes, then the small amount of money is simply not enough and you will want to look at obtaining some outside coverage, at least until you are more financially secure, your kids are maybe older, you're able to afford their college more or your house is paid off, et cetera. Essentially, the more...the more liabilities you have, the more coverage you're going to want to have, and oftentimes this is not provided in a sufficient amount through the term insurance you receive at work. So this has been John Pinelli, financial representative, talking to you today about group term life insurance."