How to decide coverage under Group Life Insurance Policies?


Group life insurance policies have been constructed in a way to benefit a group of members or the insured, through a single policy contract. Like in case of a family member providing contingency coverage to his family in addition to an existing life insurance policy cover, or as the case may be.

Suppose A is married and has two children. A did not have an individual life insurance policy but he was a part of the group life insurance policies provided by his employer. Thankfully, his family is entitled to a certain amount of benefit at the time of his (A’s) death. However, that amount may not be still enough.

Group policy should be used as a supplement. The idea to be a part of the group insurance cover provided by an employer is convenience and acceptance.

A should have ideally considered being a part of group life insurance policies subject to the living (maintenance) expenses of his wife and his first child (including the education cost till the time his son attains maturity or his daughter is legally eligible to get married). Similarly, A must also take into account the expenses of his younger child, so that if A passes away suddenly, his family is prepared to deal with the monetary loss.

But, is A entitled to do so?

The sum insured under group life insurance policies can be fixed by the master contract holder, which is A’s employee on a group policy. Its coverage can be extended with A sharing the premium cost and thus increase the sum assured through increased premium amount.

Only if A has an individual life insurance policy, then he may not need to depend too much on the group life insurance policies offered by his employer.

What are his other options?

Instead, A must consider more options such as to be a part of another kind of group life insurance policies as well. If A is a member of a social organization like group insurance policy to protect a loan. Then too, if A dies suddenly, then he doesn’t leave his family indebted.

There is also a group savings insurance policy which can be used to save more money.

Group life insurance policies can be taken by anybody except that the purpose of the buying such a policy should be incidental.

How much amount is enough?

To arrive at a good amount of life insurance including the group insurance cover amount as well, the insured must consider the loss of income in the future years if he is not alive. Then he should consider factors like a number of dependents, the present lifestyle, a number of dependent children, the personal investment needs, and the personal capacity to pay the complete premium amount.

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