A group life insurance certificate of coverage is a document that defines the coverage provided to a certificate holder under the policy purchased by a group such as an employer group. It is issued by the insurance company. The certificate of coverage explains the benefits that you and your dependents have under the policy.
What is the Purpose of a Certificate of Coverage?
The certificate of coverage can also be called a certificate of insurance. Either way, this document can be helpful for finding specific information about the insurance coverage. This document typically covers information such as the dates of coverage, group policy number, and limits of the coverage provided.1
Members of a group should receive a certificate of coverage, no matter if it is term or whole life coverage. Life insurance provides benefits to the beneficiaries on file after the insured’s death. These benefits can be used to help families pay for anything from end-of-life expenses to existing household bills. Depending on the group policy terms, some policies can allow the certificate holder to access funds while the certificate holder is still alive through the certificate’s cash value.2
Group vs Individual Life Insurance
Group life insurance is often considered an attractive employer benefit to employees. Because employers may pay most or all of the cost, group life insurance can be less expensive to the member than an individual life insurance policy. Also, the risk is based on the whole group, not just an individual; so the expense is usually less than an individual policy bought directly from an insurance company.
Individual life insurance is purchased by the individual consumer. Typically the owner pays the entire premium. Unlike group plans that can end when you leave the company, an individual life insurance policy lasts as long as the policy terms dictate and as long as premiums are met.
Whole vs Term Life Insurance
Whole life insurance offers coverage for the life of the insured, as long as the premiums are timely met. One advantage of whole life insurance is that, depending on the certificate terms, whole life insurance coverage may build cash value. The main benefit to whole life insurance is that, as the value of the certificate grows over time, the cash can be accessed during your lifetime. If your coverage has this feature, you might choose to use the cash value to pay your premiums. You also might borrow from your cash value or surrender your certificate. This might prove helpful to pay for emergency expenses, education, etc.
The simplest form of life insurance is term life insurance. Term life insurance only pays if the insured passes away during the term of the coverage. Most term life insurance certificates offer no other provisions.3
Keep this in a safe place and refer to it if you have questions about your coverage.
Sources:
- myCOI, What is the difference between a policy and a certificate of insurance?, Accessed 2024
- Texas Department of Insurance, Life Insurance Guide, Accessed 2024
- MN.gov, Term vs Permanent Life Insurance, Accessed 2024
Categories: insurance, life insurance, term insurance, whole life insurance