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Group Life Insurance

Group life insurance pays a specified amount as defined in the contract in the event of the death of an employee from any cause. The rates are based on the demographics of the group. Premiums paid by the employer on behalf of the employee are a taxable benefit, however, benefits received are non-taxable. Beneficiaries are designated on the group certificate.

The amount of coverage is generally based on either the empIoyee’s earnings or a flat amount. Earnings for the purpose of group life insurance coverage typically only include salary but may also include commission income and sometimes bonuses. A benefit schedule based on earnings will pay a benefit based on a multiple of earnings (e.g. 1 x salary, 2 x salary, etc.). A flat benefit schedule is not based on earnings bur rather all members of a class would have the same level of coverage such as $25,000 or $50,000 (amounts could range from $25,000 to $500,000). There can also be different benefit schedules for different classes such as an "executive" class could have a benefit schedule of 2 x salary and "all other employees" could have a flat benefit schedule of $50,000.

All group life insurance plans are subject to a maximum level of coverage. The benefit maximum places an upper limit on the basic group life insurance coverage available to employees.

Other features of Group Life Insurance include Non-Evidence Maximum (NEM), Waiver of Premium, Conversion Privilege and Benefit Reduction Schedule.