Group Life Insurance

In group life insurance, the policyholder—often an employer—holds the master policy. Covered employees receive a certificate of insurance describing their coverage.

In a contributory plan, employees pay part of the premium and minimum participation requirements may apply. In a noncontributory plan, the employer pays the entire premium and eligible employees are generally covered automatically.

Group plans may define eligibility based on employment status, hours worked, class, or waiting/probationary periods. Coverage begins according to the plan's eligibility rules.

Employees enrolling when first eligible may receive coverage without individual evidence of insurability up to plan limits. Late enrollment or excess coverage may require evidence.

When group coverage terminates because employment ends or eligibility changes, an insured may have a limited period—commonly 31 days under many group-life provisions—to convert to an individual policy without new evidence of insurability.

Group plans may provide dependent life coverage for spouses or children according to plan terms and applicable law.

Employer-provided group term life insurance can have federal income-tax consequences above certain statutory coverage levels. Exam questions may test the basic concept rather than detailed tax calculations.