Group Term Life Insurance: Beyond the Basics 

Ensuring financial security for your loved ones

As a financial advisor, you’re already well versed in strategies that can help secure financial futures. However, while your days are filled with helping clients to protect their futures, have you taken the time to protect your own?  

Through your FSI membership, you have access to a variety of insurance plans that can help build financial stability in different ways—including group term life insurance, issued by The Prudential Insurance of America. This type of policy offers an effective and affordable way to help provide your family with financial stability in the event of your death.  

What is group term life insurance? 

Like any life insurance policy, group term life insurance provides a death benefit to help your loved ones maintain their lifestyle and meet future financial needs—even if you aren’t able to be a part of that future.  

Group term life insurance offers several specific benefits that may make it an appealing option for you and your family. First, with a group policy, your premiums are reflective of group-negotiated rates. Additionally, you can “lock in” your rate for a specific period of time, known as the “term.” Your rate is pre-set at the start of the term and is determined based on factors such as your age, health, and term duration.  

The CoveredAdvisor Plan’s rates are based on 5-year age bands, providing a structured, generally cost-effective way to set your premium and help ensure your beneficiaries are financially protected if you pass away during the policy term. 

How does group term life insurance work? 

During the application process, you’ll determine your coverage term and rate. Once the policy is active, it remains in force until the term ends and/or as long as you meet any other eligibility requirements and pay the premiums.  

For example, through FSI CoveredAdvisor Group Term Life Insurance, your rate is determined based on your age when you apply. It will adjust automatically as you age, gradually increasing in five-year increments, and if you pass away during the term, your beneficiaries will receive your coverage amount to help them manage their financial obligations. Additionally, coverage gradually decreases each year once members reach age 65 until it eventually terminates at age 75 if still within the term duration. 

What are the differences between group term life and whole life insurance?

Both group term life insurance and whole life insurance offer a tax-free, lump-sum death benefit to beneficiaries, but they differ significantly in their structure and benefits.  

Group term life insurance is known for its cost-effectiveness, providing coverage at a lower premium with group-negotiated rates. You can choose a specific coverage period with term life, meaning you only pay for the protection you need during that time. Unlike whole life insurance, group term life does not include cash value or investment components, making it simpler and more straightforward to manage. If you pass away during the specified term, the death benefit is paid out to your beneficiaries, ensuring financial security for your loved ones when they need it most.  

Group term life insurance also offers greater flexibility, allowing you to adjust or discontinue coverage as your financial needs and circumstances change. On the other hand, whole life insurance provides lifelong coverage and accumulates cash value, but it comes with higher premiums and less flexibility in terms of adjusting or discontinuing the policy. 

What does group term life insurance cover? 

Exact inclusions, terms, and exclusions vary by policy, but in general, group term life insurance provides a death benefit if the insured dies during the policy term. Named beneficiaries can use the payment however they like, such as to help with mortgage costs, tuition expenses, or even regular living expenses like groceries and utilities.  

What happens if I become terminally ill in the near future? 

Some life insurance policies, including FSI’s CoveredAdvisor plan, can provide financial support even before you pass away if you’re diagnosed with a terminal illness. The accelerated benefit¹ feature becomes active in the case of a fast-moving terminal illness, paying up to 90% of your benefit if you have a life expectancy of six months or less. 

How much does group term life insurance cost? 

Group term life insurance has set rates that correspond to age bands, providing clear and predictable costs. The policy rates are pre-established for either the duration of the term or the set “steps” defined by the Plan. 

What are the advantages of group term life insurance? 

Compared to other types of life insurance, group term life insurance offers several key advantages: 

• Flexibility: You can choose the term length and coverage amount that best fit your needs. It allows you to adjust or discontinue coverage as your financial situation evolves. 
• Simplicity: It is straightforward and easy to understand, without the complexities of investment or cash value components. 
• Cost: Group term life insurance premiums are typically lower than other types of life insurance due to their nature, and also because they use group-negotiated rates. Additionally, the rates are set for the duration of the term, providing a reliable and manageable option.

FSI members have access to competitive, member-exclusive rates on Group Term Life Insurance through the CoveredAdvisor Program, issued by The Prudential Insurance Company of America. 

CoveredAdvisor insurance plans

As a financial professional, it’s essential to remember that the cornerstone of financial planning lies in preparing for all possibilities—including your family’s financial stability after your passing. Just as you care for your clients’ futures, don’t forget to take time to help protect your own. 

FSI members, learn more about the exclusive life insurance plans available to you.

Not an FSI member? Learn more about membership or join membership today!

Need help? FSI’s advisors are available to explain how the different features work and help you through the decision-making process. Call 888-279-8348 (7 a.m. – 4 p.m. MT) or email us at FSIPlan@gotodsi.com for more detailed plan information.