The Basics of MD Group Life Insurance

Posted By: Team Moody,

MD Group life insurance is one of the perks that are commonly available to employees. While the employees receive the coverage benefits, the contract is between the employer and the insurance firm.

Group coverage plans, such as those offered by Maryland D Group Life Insurance, comprise over 50% of all life insurance policies. Such plans cover more than 108 million people around the world. In contrast, about 102 million people worldwide have individual coverage.

Most insurance experts agree about the benefits of group life insurance, regardless of the amount. Crediful CEO Chane Steiner encourages employees to take advantage of group life insurance coverage in the workplace, especially if it is free. For Steiner, the benefits of this type of coverage outweigh the relative value and the availability of other life insurance plans.

Why should you sign up for group life insurance?

There are two distinct advantages to group life insurance: almost anyone qualifies for them, and coverage is often free to employees.

Compared to other life insurance plans, it is relatively easy to qualify for group life insurance. Signing up for an individual life insurance policy always entails a risk of being rejected. On the other hand, with group life coverage, there are no medical exams to deal with, and approval is almost always guaranteed.

How are insurance companies able to offer group life insurance so generously? Most companies assess the group risk in its entirety when determining premiums. Insurance firms also consider factors such as females’ ratio to males, ages of the members, and work type.

Employees can usually avail of free coverage when the group plan is provided as an employment benefit. They may also get more comprehensive coverage at group rates if they wish.

Why you shouldn’t rely solely on group life insurance

As attractive as free life insurance is, it is better to think of group coverage to supplement a more comprehensive insurance plan. Rather than relying on group coverage to replace your personal life insurance policy, it is best to sign up for both types of coverage.

Why shouldn’t you depend solely on the group life insurance coverage offered by your employer? With such arrangements, the employer has total control over the policy. Therefore, you don’t have any say on the extent of the coverage or how long the plan will cover you.

Group life insurance covers you only as long as you work for the company. If you resign or are terminated, the coverage ends immediately. Employers may even stop paying for their employees’ life insurance as a cost-cutting measure. Furthermore, there is a chance that the next company you work for may not provide life insurance coverage at all.

Perhaps the most compelling reason not to rely only on group life insurance is the modest coverage you will receive. Most such policies provide very little coverage, especially when compared with individual life insurance plans.

How much could your family expect to receive in the event of your passing? With most group life insurance plans, the death benefit you will receive is only 100% to 200% of your annual salary. This amount wouldn’t nearly be enough to cover the long-term needs of your family.

Options and alternatives to group life insurance

If you already have group life insurance, you might consider buying out the policy if you leave your job. However, it will probably cost you a lot of money to convert your existing group life insurance to a personal life insurance plan.

Another option would be to purchase additional coverage at lower rates intended for group policyholders. You will probably have to undergo a medical examination if you go for this option, but the cost will likely be lower than converting your group plan to personal insurance.

If you are young and in reasonably good health, you could probably get reasonable rates on an individual life insurance plan that requires full disclosure of your medical history and a medical exam. You could even get lower rates if you don’t have risk factors such as early deaths in the family.

If you have to choose between getting additional group coverage and switching to a personal life insurance plan, compare the rates and benefits beforehand. You could then make a decision based on which plan provides the most benefits to your family.

About Moody Insurance Worldwide

Moody Insurance Worldwide, a division of Moody & Associates that was founded in 1914, is a leading provider of risk management programs and insurance coverage to individuals and businesses across the East Coast. We write all sizes of businesses, with technical expertise in many key industry areas, and provide personal insurance programs for estates and high net worth individuals. Our licensed, experienced commercial account managers can work with you to determine the coverage that you need at a competitive rate. Contact us today at (855) 868-0170 to learn more about what we can do for you.