Wheeling, IL (PressExposure) March 04, 2010 -- AccuQuote, a leader in providing term life insurance quotes to people across the United States, explains the difference between group term life insurance and individually underwritten term life insurance. The multi-carrier life insurance quoting and brokerage firm provides pros and cons of each type of term life insurance coverage to help consumers make a solid financial decision.
Term life insurance is, by definition, temporary life insurance. It provides coverage for a specified number of years. Each year, a premium is paid to cover the risk of death during that year. There are two sources from where consumers can receive term life insurance benefits; an employer or individually.
"It's important to weigh the pros and cons of each type of term life insurance coverage," says Byron Udell, founder and CEO of AccuQuote. "Doing so will help you choose the one that will provide the right type and amount of life insurance coverage for your family's financial future."
AccuQuote provides key factors of group and individually underwritten term life insurance:
Group Term Life Insurance
- Often provided through an employer as part of an employee's overall benefits package
- Spreads the risk of claims over a large group of people, so the premiums are divided between the employer and all participating employees
- Everyone under a group life insurance policy pays the same premiums, even those with health conditions
- Choice of plan, carrier and coverage amount is generally made by the employer
- There is no medical exam required, therefore almost anyone can qualify for coverage
- If you lose your job, you'll probably lose your group term life insurance benefits
"Group life insurance coverage is especially beneficial for those who have difficulty qualifying for coverage on their own, like those with health conditions or who are older," says Udell. "But keep in mind that your options are limited with this type of coverage." Experts recommend having 10 to 15 times your annual salary in life insurance coverage, he adds. It's rare that employers offer this much life insurance protection, so in addition to group coverage, consumers may choose to purchase an additional individually underwritten term life insurance policy.
Individually Underwritten Term Life Insurance
- Insures one person for a specified number of years
- Choice of plan, carrier and coverage amount is made by the consumer
- Medical exam is usually required to determine premium amount based on individual health and lifestyle factors
- Term life insurance rates are near record lows: A healthy 40-year old man can get a 10-year level term life insurance policy worth $500,000 for less than $21 a month. And a healthy woman can obtain the same type and amount of coverage for less than $18 a month
- If you lose your job, you won't lose your individual term insurance benefits
"For people who have difficulty qualifying for coverage on their own, like those with health conditions or who are older, then a group policy is an excellent option. But you may end up paying more than necessary for group coverage because the risk of claims is shared among the insured group," says Udell. "Therefore, if you're young, relatively healthy and looking for affordable coverage for a guaranteed amount of time, an individual term life insurance policy is probably a better option."
The most important thing to keep in mind when shopping for life insurance coverage is that no matter what type you choose, having some life insurance protection is better than having nothing at all.