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Questions Regarding Group Coverage

How is the individual term life policy different from the group policy I buy from my employer?

An individual term life insurance policy is priced and underwritten based upon your age, health class, gender and pre-existing conditions. You purchase a fixed dollar amount of coverage that will be in-force for a specific time period (i.e. 10, 20 or 30 year time period) with premiums based upon your age at date of issue (meaning the date the policy formally goes into effect). Coverage levels and premiums will not increase during the time period of coverage purchased. With individual coverage, first you apply for coverage, and then approval and premiums will be determined after you complete a medical exam. Individual term life insurance policies are also portable, meaning you can keep the policy for the extent of the term purchased so long as you pay your premium. The policy is not tied to your employment with a particular employer. At the end of the term purchased, approval for an extension of coverage will be based upon a medical exam and priced and underwritten based upon your age, health class, gender and pre-existing conditions at the end of the initial term period.

Group life insurance policies are priced and underwritten based on unisex group rates. This difference in pricing and underwriting may cause one type of policy (group or individual) to be more or less expensive depending on your individual circumstances. Group coverage is based upon a multiple of your base pay. Group life insurance provides two types of coverage:

  1. basic coverage and
  2. supplemental coverage

With basic coverage, your employer generally pays the premium during your employment and you do not need to apply for it. This arrangement generally ends when your leave your employment with such employer.

With supplemental coverage, you apply for additional coverage (above the basic coverage amount) through an evidence of insurability process and individual underwriting. After the coverage is purchased, premiums increase with age (based on five-year age bands) and as base salary increases, your coverage amount generally increases up to a certain coverage level limit without any further medical exams. Basic and supplemental group insurance is portable, but in a different manner than individual coverage. When you leave your employer, your group policy does allow you to convert to an individual policy without a medical exam, however the premium rates at the time of the conversion may increase significantly, will continue to increase as you age and you pay the entire premium for such coverage.

Should I cancel my Supplemental Group Coverage when I apply for Individual Term Life Insurance?

Not immediately. We strongly recommend that you maintain any existing supplemental group coverage until your individual term life policy is approved and fully in-force.

What happens if I cancel my supplemental Group Coverage and want to reinstate?

Typically, you can reinstate supplemental group coverage at any time or during open enrollment periods. However, this reinstatement will require Evidence of Insurability (medical exam) and coverage can be declined. You should check with your employer for reinstatement requirements.

 

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