Introduction Many businesses offer group life and health insurance plans to their employees as part of a benefits package. This type of coverage is offered to every employee of the company. As an employer, this can provide benefits such as recruiting talented employees and retaining them once they are hired. Employees get benefits like cheaper insurance rates and guaranteed acceptance Characteristics Identification * Term insurance is a form of life insurance that provides a death benefit but does not accumulate cash value, so it is typically the least expensive form of a life insurance coverage.
This often makes it less costly for the organization to offer group term as a benefit. Because the coverage is underwritten based on the characteristics of a group as opposed to an individual, the insurer can spread the risk over the entire group. This reduces the insurer’s risk, often resulting in group term being less expensive for the policyholder than an individual term policy. Eligibility and Availability * Because underwriting is based on characteristics of the group instead of individuals, it is often easier to qualify for group term than an individual policy.
Policyholders may also be able to convert the policy to a permanent life insurance plan at predetermined times, such as when attaining a certain age or when leaving the company. Policies may be available for low-coverage amounts or for amounts of $100,000 or more. Additional coverage may be available for the policyholder’s family. * Sponsored Links * UK Pension Worth ? 50k+ Our knowledgeable ex-pat staff can show you how you can save ? 1,000s www. forthcapital. com/QROPS Cost.
* A company or organization may pay some or all of the cost of the premium for the policyholder and allow her to pay for the coverage through payroll deduction for added convenience. Companies may offer a base amount of group term coverage, such as an amount equal to an employee’s salary, at no cost while allowing for the purchase of additional amounts. Some companies may offer free group term insurance as part of a benefits package for management personnel or company executives as a perk. Tax Implications.
* If a group term policy is issued by an employer and the amount of coverage exceeds $50,000, there may be tax implications for the policyholder. As of 2011, if the employer pays any of the cost of the coverage or the employer uses premiums paid by at least one employee to subsidize premium payments for other employees, some or all of the premium may be considered taxable income to employees.
This rule does not apply if the policy is issued by a group other than an employer Read more: Characteristics of Group Term Life Insurance | eHow.com http://www. ehow. com/info_7818934_characteristics-group-term-life-insurance. html#ixzz2PNo5OAk3 Limits * You are limited as to how much life insurance you may buy through your employer.
This limit is expressed as a multiple of your income. You may deduct premiums from your income used to buy group life insurance, but only up to certain limits. The IRS allows you to deduct premium payments used to support $50,000 worth of death benefit. Any amount in excess of this is taxable as income. Significance.
* When you buy life insurance through a group plan, you get a group rate. This rate reflects the risk that the insurer takes on for insuring the group as a whole. Health exams are generally unnecessary, and you may join a group plan without extensive underwriting. Premiums are deducted from your paycheck. While there are limits on how much premium you may deduct, you can buy more death benefit than what the IRS allows for deductible premium payments. * Sponsored Links * British Expat Hong Kong?
Avoid Losing 55% of Your UK Pension Download a Free Expat Pension Guide www. forthcapital. com/QROPS Benefit * The benefit with group term life insurance is that you’re able to purchase more insurance than you otherwise would be able to for the same amount of money. In other words, your premium dollars go further. Group rates reduce the cost of insurance since employers get discounts on group term life insurance. With the tax deduction on the first $50,000 of death benefit, you get $50,000 of life insurance that is completely untaxed. Consideration.
* When you reach your employer’s limit for life insurance, consider buying private insurance. A private insurance policy may cost more than a group term life insurance policy, but you won’t lose the policy if you leave your employer.
With group policies, your insurance may be lost if you leave the employer. Unless the employer offers you a conversion option for your insurance, you won’t have any death benefit when you leave. Read more: Group Term Life Insurance Limits | eHow. com http://www. ehow. com/info_7952977_group-term-life-insurance-limits. html#ixzz2PNpHdBst.