Group Life Insurance

How does group life insurance work?

Group life insurance is typically a form of term life insurance. If you die while a term policy is in place, your beneficiary receives the death benefit. In many cases, you're automatically covered. However, if you leave your job, you could lose your group life insurance coverage.

Who pays the premiums for my group life insurance?

Group life insurance premiums are typically paid by your employer. But there can also be instances when it's paid by you (the employee), or a combination of both. Here are some details for each of those scenarios:

Employer-Paid Premiums: The entire cost of the premiums are paid by the employer as part of the employee benefits package. This is often seen as a way to attract and retain talented employees.

Employee-Paid Premiums: Some employers offer group life insurance as a voluntary benefit, meaning employees have the option to purchase coverage and pay the premiums themselves through payroll deductions.

Shared Costs: Another common arrangement is a cost-sharing model, where the employer pays a portion of the premiums, and the employee covers the remaining balance. This approach helps manage costs for both parties while still providing valuable life insurance coverage.

Should you get life insurance through your employer? Here are all the things you need to consider.

How much does group insurance cost?

It depends on your employer's plan. Many employers offer a base amount of group life insurance at no cost to you. But some employers might pay only a portion of the premiums or none at all. In these cases, you would need to pitch in to pay for coverage, usually through a payroll deduction. The good news is that group plans tend to be affordable options.

Many times, group life insurance won't be enough to cover what you need. That's why people often get additional individual life insurance to make sure they get the right amount of coverage. You can consider something like an affordable term life policy or other types of life insurance.

What group life insurance options does Northwestern Mutual have?

If you're a business owner looking to add group life insurance as a benefit for your employees, Northwestern Mutual has options that can cover small and large groups. We can also help employers who wish to add additional insurance options—such as accidental death and dismemberment (AD&D) insurance and contributory life insurance, which is sometimes called voluntary life insurance.

Talk to an advisor about the right option for you.

What is the difference between group life insurance and term life insurance?

Group life insurance is often a form of term life insurance. Your employer might offer group life insurance, but if you leave your job, your coverage will end. An individual term life insurance policy is not tied to your employer. For that reason, many people choose to supplement group life insurance through work with an individual policy.

Is it possible to have group life insurance in addition to my individual life insurance?

Yes. You can take advantage of the group coverage offered by your employer even if you already have your own individual life insurance policy. In fact, this can be a great way to boost your death benefit while you're employed.

If your employer offers other forms of supplemental insurance, like accidental death and dismemberment insurance, you can also opt into those while maintaining your individual policy.

I have group life insurance through my employer. Should I get an individual policy as well?

Group life insurance is a great perk, but that doesn't mean it will meet all of your coverage needs.

That's because group coverage typically covers only about one or two years' worth of your salary, which is less than what most people need. That's why people often get additional individual life insurance to make sure they get the right amount of coverage. Also, while group life insurance coverage through your employer could end if you leave your job, individual coverage is yours no matter where you work.

Start by getting a good idea of how much life insurance you need. Then, take a look at all of our life insurance options.

Are group life premiums tax deductible?

Because life insurance is considered a personal expense by the IRS, any premiums that you pay usually are not tax deductible. Also, you won't be able to deduct premiums paid by your employer. However, there are some exceptions to deductibility of life insurance premiums—such as some income tax deductions for businesses that pay life insurance premiums.

Learn more about the ins and outs of life insurance and taxes.

Is the benefit from group life insurance taxable?

It depends on the amount of your coverage. According to the Internal Revenue Service (IRS), the premiums for the first $50,000 of coverage provided by the employer are not considered taxable income and the benefit itself is tax free. However, for coverage amounts over $50,000, the taxability depends on who paid the premiums and whether those payments were included in the employee's taxable income. It's important for you to review your specific policy details and consult with a tax professional to fully understand the implications of your group life insurance benefits.

Get more detail about the taxability of life insurance.

What happens to my group life insurance after I retire or quit?

Generally speaking, once you no longer work for the employer sponsoring your group life insurance policy, your coverage ends. This applies whether you quit, retire, are fired, or laid off. However, in some cases you could have the opportunity to keep all, or a portion of, your group coverage by paying the premiums yourself through the plan's portability provision. Want to know more about what happens to your benefits when you leave your job? Read this article.

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