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Group Life Insurance

A group life insurance policy is a single contract that covers a number of people, often within a large organisation.

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What you need to know

  • Group life insurance is usually offered by an employer or business to its workers or members.
  • It is typically much cheaper than an individual life insurance policy – but it is not tailored to your specific needs.
  • It usually requires minimum or no personal information to apply.

What is group life insurance?

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".

ProviderMinimum CoverMaximum CoverMaximum entry age
OnePathN/AUnlimited Death cover, up to $5 million TPD cover64 for "Age 65-67" cover, 69 for "Age 70" coverLearn More
WestpacDeath & 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
  • Death cover: Unlimited (subject to approval
  • TPD cover: $1 million (over 65) or $3 million (under 65)
  • Income protection cover: $30,000
  • Terminal illness benefit: Up to $3 million
69Learn More
ANZ$40,000
  • Lifestage Cover (incl. Death, TPD & Terminal illness): $300,000
  • Tailored Cover (Employer's choice) & Choose Your Own Cover (Voluntary/Employee's choice): Unlimited
  • Terminal Illness: $2.5 million
  • TPD cover: $3 million
  • Income Protection: $30,000 monthly
65Learn More
AGIN/AUnlimited Death cover, up to $5 million TPD cover69 for Death cover, 66 for TPD coverLearn More

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

Group

Group life insurance

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.

Single person

Life insurance

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.

Group life insurance vs individual cover

DifferencesGroup life insuranceIndividual life insurance
Level of cover Automatically set by the group policyDecided by you
Automatic acceptance?YesNo
How are premiums paid?Typically, contributed by your employer or deducted from super contributionsPaid by you directly
Is the policy transferable?Your cover may not be transferableYes, the policy can usually be taken with you if you change jobs or super funds

How are group life insurance premiums paid?

These are the 2 main ways group life insurance premiums are generally paid:

piggy bank

Through your super

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.

Number 2

By you or your employer

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.

What happens to my group life insurance if I change jobs?

It's likely that you'll lose your life insurance cover. This is because group life insurance often isn't transferable since the policies were bought in bulk. If you're worried about losing cover, speak to your employer and see if you can make an arrangement with them.

How do I get group life insurance?

You'll commonly find group life insurance offered:

  • Through super. Group life insurance in Australia largely consists of policies taken out through compulsory superannuation.
  • Through employees remuneration. It can be a competitive addition to employee remuneration packages and can also help protect workers.
  • As part of a union membership. Some worker bodies such as unions and associations also offer group life insurance to their members to attract and keep members.

Pros and cons of group life insurance

Pros

  • Cheaper premiums than standard life insurance.
  • Automatic acceptance with most groups.
  • It's often easier to get covered if you have health issues.
  • In some cases you don't need to pay the premiums.

Cons

  • The payout is often low – often only one or two times your annual salary.
  • It's often not transferable e.g. if you change jobs, you'll no longer be covered.
  • It's not tailored to your financial needs e.g. the payout may not be enough for your loved loves to get by on.
  • Your premiums can increase over time.

Is group life insurance worth it?

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.

FAQs about group life insurance

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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