Why Buy Group Term Life Insurance?

[Guest ezollars]

I guess I'll answer. The simple answer is because a) it is 10% cheaper and b) it only offers a benefit so long as the individual is employeed and giving a benefit to the employer. And changes in logevity mean that it costs less to provide as mortality goes down (the reason for the recent changes in the PS-58 tables).

I don't know about you, but it seems to me that when there is a death of a wage earner (which someone covered by group term is going to be by definition), there is a need for the benefit that is fulfilled.

As a CPA in a tax practice, I've seen this "worthless" benefit used a number of times just in the past year.

[Guest Insuror]

Why do employers continue to provide a coverage that is not a benefit to all but 8 tenths of 1 percent of a group?

Group term life insurance does not work. It does not accomplish the goal of being a benefit. It is a lottery ticket, at best, for someones benefiary.

The reason group life does not work is because no consideration was made for the fact that people are living to be 80+ years of age. When the first group term coverage was written in 1911 the average at death was 49 years old. By 1940 the average was 65. Today, the price of term goes down, but so does likelihood of a benefit being payable when it is truly needed. According to LIMRA, there are 38 million households who do not have life insurance. I would assume this does not take into account coverage through an employer, but again, that isn't much.

Employers/Employess can get Group Universal Life that provides death benefit only or allows for cash accumulation and paid-up coverage, for less than 10% more than group term.

Why is there such a resistance to change?