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Flexible Plan Of Group Term Life Insurance

By: Dewis Hally

Many small companies cannot afford to set up a group term life insurance benefit program for their employees. If you work for a small company that has a minimum of five employees and your employer does not currently have a basic group term life insurance plan or a voluntary supplemental term life program, you can sign up for Flexible Plan of Group Term Life Insurance policy.

How It Works

Flexible plan of group term life insurance is a plan that is set up by and paid for by employees. It was created to provide low-cost group term life insurance to employees where NO employer paid group program is in place. It is also for groups that are NOT covered by a Beneficial Life Basic Group Term Life Insurance plan. Flexible plans are voluntary programs that do not require the employer to contribute financially.

Options that Affect the Group Policy Premiums

Flexible plan term life insurance rates are determined by how the group chooses their coverage: fully underwritten or guaranteed-issue. The group as a whole must choose one or the other. If the group chooses to be covered by the fully underwritten option, then a one page health form/questionnaire must be completed at the time of application. The one page health form covers the whole group. If the group chooses the guaranteed-issue option, no health questionnaires or medical exams will be necessary, however, the group term life insurance rates will be more expensive since the carrier will be insuring the group unconditionally.

Another option that will affect the flexible plan term life insurance rates is whether or not the group chooses to apply "tobacco-free" or "tobacco-users." The option to blend the two is also available.

While the premiums will fluctuate depending on ages and coverage reduction schedules (these schedules allow for coverage to continue after the age of 65 for active employees), you can purchase your flexible plan group term life insurance policy with a one year rate guarantee. Additionally, if an employee chooses to retire or quit their job, they may also convert their policy to some kind of permanent coverage. Waivers of premium for disability are not included.

Restrictions

As with all plans, there are some restrictions that apply to flexible plan group term life insurance policies:

1. Premiums must be paid through payroll deductions.

2. Coverage terminates when the employee turns age 70.

3. Spouses are eligible for coverage but the face value may not exceed that of the employee or $250,000 (depending on your state's maximum based on regulations).

4. If you work in an industry that is considered a hazardous occupation, you are ineligible to apply. Your spouse's coverage is also subject to occupational approval.

5. Dependent children may be insured for either $2,500 or $5,000 until the age of 26. Proof of insurability is required.

The flexible plan group term life insurance is not available in all states so it is best to consult with a knowledgeable business financial advisor.

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