How to evaluate Group Life Insurance, or others?

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How to evaluate Group Life Insurance, or others?

Postby boknows » Wed Jan 30, 2013 11:30 am

I'm 31, wife is 31, have a 9mo child, and we're all healthy. I'm working full-time, and my wife is working 60%, but we have roughly the same earning potential these days (assuming her full-time salary).

Both of our employers offer the standard 2xSalary Employee Term Life Insurance, and 2xSalary Spouse Life Insurance. During the prime of our earning times, we're looking to get a supplemental life insurance to ensure that either of us would be ok in the event of one of us departing suddenly during our "accumulation phase" of saving.

My employer offers a Group Universal Life insurance, but honestly I have no idea how to evaluate whether or not it's good. I've read a few threads on BH about the various types and have heard it said that "there is no situation where a healthy individual should get GUL, and should opt for other choices." Is this a widely held belief? How do I protect our human capital?
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Re: How to evaluate Group Life Insurance, or others?

Postby SimonJester » Wed Jan 30, 2013 12:18 pm

Go with a 20 or 30 year term policy outside of your employer. If all your life insurance if with your employer and you are laid off or have to quit working due to illness you might end up with no life insurance.

Also group policies through work would be a yearly renewal thus subject to rate increase every year.
"They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety." - Benjamin Franklin
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Re: How to evaluate Group Life Insurance, or others?

Postby rkhusky » Wed Jan 30, 2013 1:34 pm

SimonJester wrote:Go with a 20 or 30 year term policy outside of your employer. If all your life insurance if with your employer and you are laid off or have to quit working due to illness you might end up with no life insurance.

Also group policies through work would be a yearly renewal thus subject to rate increase every year.


Get in the best shape that you can so that you can get the best medical rating possible and then lock in a 5-10x salary policy for 30 years. Or perhaps a 20 year term with the thought that you won't need as much insurance later in life.
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Re: How to evaluate Group Life Insurance, or others?

Postby dhodson » Wed Jan 30, 2013 1:58 pm

Don't buy permanent insurance unless you need a permanent death benefit or want one knowing likely if you live a normal lifespan that you could have done better investing. Do as the others have suggested. If you are in good health it's frequently even cheaper getting it outside of work when you compare apples to apples.
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Re: How to evaluate Group Life Insurance, or others?

Postby boknows » Wed Jan 30, 2013 4:01 pm

SimonJester wrote:Go with a 20 or 30 year term policy outside of your employer. If all your life insurance if with your employer and you are laid off or have to quit working due to illness you might end up with no life insurance.

Also group policies through work would be a yearly renewal thus subject to rate increase every year.


In all reality, we are aiming to be FI in 10 years, and RE before age 50. I assume that a term policy to end around the time of FI would be the best approach. Potentially 10-15 years. After that, we'd be essentially self-insured.
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Re: How to evaluate Group Life Insurance, or others?

Postby ShowMeTheER » Wed Jan 30, 2013 4:06 pm

SimonJester wrote:Go with a 20 or 30 year term policy outside of your employer. If all your life insurance if with your employer and you are laid off or have to quit working due to illness you might end up with no life insurance.

Also group policies through work would be a yearly renewal thus subject to rate increase every year.


You should check with your company. Many large employers have multi-year fixed rate contracts. You might want to think of them as yearly renewal, but that may not be the case in terms of contracts.
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Re: How to evaluate Group Life Insurance, or others?

Postby mephistophles » Wed Jan 30, 2013 4:10 pm

boknows wrote:I'm 31, wife is 31, have a 9mo child, and we're all healthy. I'm working full-time, and my wife is working 60%, but we have roughly the same earning potential these days (assuming her full-time salary).

Both of our employers offer the standard 2xSalary Employee Term Life Insurance, and 2xSalary Spouse Life Insurance. During the prime of our earning times, we're looking to get a supplemental life insurance to ensure that either of us would be ok in the event of one of us departing suddenly during our "accumulation phase" of saving.

My employer offers a Group Universal Life insurance, but honestly I have no idea how to evaluate whether or not it's good. I've read a few threads on BH about the various types and have heard it said that "there is no situation where a healthy individual should get GUL, and should opt for other choices." Is this a widely held belief? How do I protect our human capital?


Group Universal Life is roughly equivalent in cost to group pure term, and sometimes it is lower in cost. GULs offer a sidefund (within the policy) where you can pay extra to accumulate cash deferred savings. If you just go with the basic GUL coverage, you have in effect, bought term insurance. My employer paid all the premium for my basic GUL and I paid for extra coverage. Total cost was less than comparable individual term. So, check prices to determine what is best in your case.
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Re: How to evaluate Group Life Insurance, or others?

Postby ShowMeTheER » Wed Jan 30, 2013 5:35 pm

Definitely look outside of your workplace policies. In most cases, you should be able to find a similar or better rate. Similar is still fine... since you then avoid the worry of losing your job and coverage.

In cases of poor health or pre-existing conditions that get screened in underwriting, you may find that your outside of work cost is significantly higher than the group policy. No harm in getting some quotes.
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