Employer sponsored group insurance programs can be provide the purchase of insurance policies on more favorable terms than can be purchased as an individual. The terms are more favorable when procured on a group basis because of:
- Economies of Scale;
- Reduced Commissions;
- Pooling of Underwriting Risks;
- Less Adverse Selection; and
- Tax Advantages.
An employee can purchase employer sponsored group insurance coverage at lower costs with reduced or guaranteed issue underwriting. An IRC 125 Cafeteria Program allows for certain personal expenditures to be paid with before-tax dollars. Employer sponsored group insurance policies might require continued employment as a pre-condition or may be portable after an employee retires or is terminates employment.
A financial advisor can evaluate employer sponsored group insurance policies available through the workplace to take advantage of the more favorable terms from these insurance and financial products. Employer sponsored group insurance that can be obtained through the workplace include:
- Group term life insurance;
- Payroll deduction universal life insurance;
- Short-term and long-term disability insurance;
- Long term care insurance; and
- Group auto insurance.
Factors to consider when weighing your options are an individual’s insurability, product portability and expected tenure with an employer. A financial advisor can weigh the pros and cons of employer sponsored group insurance programs to determine their use with your overall financial plan.
