Group life insurance is a basic employee benefit under which an employer buys a master policy and issues certificates to employees indicating participation in the plan. Group life insurance may also be available through unions and associations.
Group life insurance plans are usually issued as yearly renewable term life insurance, but some plans may provide permanent life insurance.
On main characteristic of group life insurance is Conversion at Termination of Employment. This means regardless of whether termination is due to severance, disability or retirement, the employee has the automatic right to convert to an individual life insurance policy without evidence of insurability or taking a physical examination.
Usually, conversion of group life insurance coverage must be within 30 days of termination of employment. The premium upon conversion of the life insurance policy is based on the employee’s age at the time and will cost more than the group term life coverage.