Group life insurance is when a single insurance contract covers a group of people. In Australia, these are typically employees of a large-scale business or organisation, or members of a super fund.
Unlike other life insurance cover, they typically don't require much personal information on each person's health status. Instead, a series of assumptions are made on the health condition of the collective group.
The payouts are usually lower than standard life insurance policies but premiums are cheaper thanks to a "bulk discount".
| Provider | Minimum Cover | Maximum Cover | Maximum entry age | |
|---|---|---|---|---|
| OnePath | N/A | Unlimited Death cover, up to $5 million TPD cover | 64 for "Age 65-67" cover, 69 for "Age 70" cover | Learn More |
| Westpac | Death & TPD cover: $50,000 for ages 20-34, $35,000 for ages 25-39, $20,000 for ages 40-44, $14,000 for ages 45-49, $7,000 for ages 50-55 |
| 69 | Learn More |
| ANZ | $40,000 |
| 65 | Learn More |
| AGI | N/A | Unlimited Death cover, up to $5 million TPD cover | 69 for Death cover, 66 for TPD cover | Learn More |
Group life insurance is usually provided by an employer or super fund. Policies are bought in bulk so are generally cheaper. However, the payouts are often lower and the benefits smaller. Payments are often deducted from your salary or included in your income package.
Standalone or individual life insurance cover is something you buy directly from an insurer or broker yourself. Unlike group life insurance, you'll be asked questions about your health, occupation and lifestyle. As a result, the payouts are generally bigger and the benefits are better – but it's usually more expensive.
| Differences | Group life insurance | Individual life insurance |
|---|---|---|
| Level of cover | Automatically set by the group policy | Decided by you |
| Automatic acceptance? | ||
| How are premiums paid? | Typically, contributed by your employer or deducted from super contributions | Paid by you directly |
| Is the policy transferable? | Your cover may not be transferable | Yes, the policy can usually be taken with you if you change jobs or super funds |
These are the 2 main ways group life insurance premiums are generally paid:
Premiums are automatically deducted from your superannuation contributions on a monthly basis, eating into your retirement savings but it's one less bill coming out of your bank account.
Many employers pay the full premiums to make a more competitive offer; others will require you to pay it yourself. Some employers and employees will share the costs as part of a salary sacrifice arrangement.
You'll commonly find group life insurance offered:
Group life insurance may be worth keeping if you're having difficulty finding a standard insurer that will cover you – most likely because of your health or age. Similarly, if your employer is paying your premiums, there's little harm in you keeping cover in place as you could use the group life insurance policy as a supplement to your own individual life insurance cover. Keep in mind though that if you change jobs, you'll likely no longer be covered.
Overall though, group life insurance policies often aren't tailored to your financial situation which means there's a risk that you won't leave enough behind for your loved ones to pay for everything.
The information on tax above general in nature only, and only applies to life insurance offered by employers as part of a remuneration package, and owned by the employer. Conditions may vary depending on which types of cover are included in the policy being offered. It can be a good idea to speak with a specialist to see how it may apply to the policy you are offering employees and your business' circumstances.
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