How to evaluate Group Life Insurance, or others?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills.
Post Reply
User avatar
Topic Author
lauren_knows
Posts: 193
Joined: Mon Jan 28, 2013 2:11 pm
Location: NoVA, USA
Contact:

How to evaluate Group Life Insurance, or others?

Post by lauren_knows »

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?
41 - Married - 2 kids - Aiming for FI/ER in early 40s - Creator of cFIREsim
SimonJester
Posts: 2500
Joined: Tue Aug 16, 2011 12:39 pm

Re: How to evaluate Group Life Insurance, or others?

Post by SimonJester »

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
rkhusky
Posts: 17766
Joined: Thu Aug 18, 2011 8:09 pm

Re: How to evaluate Group Life Insurance, or others?

Post by rkhusky »

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.
dhodson
Posts: 4117
Joined: Mon May 24, 2010 3:03 pm

Re: How to evaluate Group Life Insurance, or others?

Post by dhodson »

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.
User avatar
Topic Author
lauren_knows
Posts: 193
Joined: Mon Jan 28, 2013 2:11 pm
Location: NoVA, USA
Contact:

Re: How to evaluate Group Life Insurance, or others?

Post by lauren_knows »

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.
41 - Married - 2 kids - Aiming for FI/ER in early 40s - Creator of cFIREsim
ShowMeTheER
Posts: 511
Joined: Mon May 24, 2010 9:12 am

Re: How to evaluate Group Life Insurance, or others?

Post by ShowMeTheER »

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.
User avatar
mephistophles
Posts: 3110
Joined: Tue Mar 27, 2007 2:34 am

Re: How to evaluate Group Life Insurance, or others?

Post by mephistophles »

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.
ole meph,
life insurance agent
ShowMeTheER
Posts: 511
Joined: Mon May 24, 2010 9:12 am

Re: How to evaluate Group Life Insurance, or others?

Post by ShowMeTheER »

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.
Post Reply