Types of Group Life Insurance: Features and Benefits

Group life insurance is available in several forms and each offers unique features and benefits. Understanding the features of this insurance can help employers choose the most suitable option for their employees. Know the types of group life insurance features and benefits.

Types of Group Life Insurance

Types of Group Life Insurance

Term Life Insurance

Term life insurance is the most common feature of group life insurance. It provides coverage for a fixed period or “term,” usually ranging from one to five years, with the option to renew.

Features of Term Life Insurance

  • It is provided for a fixed period.
  • This insurance can be renewed frequently, although the premium may increase with each renewal.
  • Unlike whole life insurance, term life insurance does not build cash value.

Advantages and Disadvantages of Term Life Insurance


  • Generally, group life insurance is the most cost-effective form of insurance.
  • Easy to understand and manage.


  • Coverage ends if the term is not renewed or the employee leaves the company.

Whole Life Insurance

Whole life insurance is premium-based because it provides lifetime coverage as long as premiums are paid. It includes a savings component that accumulates cash value over time, which can be borrowed or withdrawn.

Features of Whole Life Insurance

  • It provides lifetime coverage protection to employees.
  • A portion of the premium goes into a savings account that grows over time.

Advantages and Disadvantages of Whole Life Insurance


  • Employees are covered for their entire lives.
  • Builds up cash value that can be used for loans or withdrawals.


  • Generally more expensive than term life insurance.
  • More complex to manage due to the cash value component.

Variable Life Insurance

Variable life insurance allows employees to invest the cash value component in different investment options such as stocks, bonds or mutual funds. This offers the potential for higher returns but also increases risk.

Features of Variable Life Insurance

  • Investment options available. Employees can choose how to invest the cash value portion.
  • Potential for significant cash value growth based on investment performance.

Advantages and Disadvantages of Variable Life Insurance


  • Employees can customize their investments according to their risk appetite.
  • Opportunity for greater cash value growth.


  • Investments can lose value, potentially reducing the cash value.
  • Generally more expensive due to the investment component.

Universal Life Insurance

Universal life insurance combines permanent coverage with flexible premiums and a cash value component that earns interest. Employees can adjust their premium payments and also death benefits within certain limits.

Features of Universal Life Insurance

  • In this insurance, employees can change their premium payments.
  • The cash value grows based on a fixed interest rate or index.

Advantages and Disadvantages of Universal Life Insurance


  • Universal life insurance offers adjustable premiums and death benefits.
  • Interest accrues over time.


  • Term life insurance is more complicated.
  • Premiums and interest rates can fluctuate.

Accidental Death and Dismemberment (AD&D) Insurance

This insurance provides additional benefits in case of accidental death or specific injuries. It is often offered as a rider to a standard life insurance policy.

Features of Accidental Death and Dismemberment Insurance

  • Pays benefits for accidental death or injury.
  • Usually an add-on to another life insurance policy.

Advantages and Disadvantages of Accidental Death and Dismemberment Insurance


  • Provides additional benefits for accidents.
  • Generally lower cost when added to a group policy.


  • Covers only accidents, not death due to natural causes or diseases.


Choosing the right types of group life insurance depends on the needs of the employees and the goals of the employer.

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