• Franchise Life (wholesale) Insurance: covered under this arrangement are employees of a common employer or members of a common association or society. The employer or group is the sponsor rather than the master policyholder. It collects and remits individual premia to the insurer. The insured holds an individual policy which he or she may keep in force through timely premium payments even if his or her relationship with the employer or association ends. The sponsoring organization determines the amount and type of coverage. Small groups whose size is below the minimum required by state law for group coverage are the typical user of such coverage.
  • Group Credit Life Insurance: financial institutions furnish what is a form of decreasing term insurance to cover debtors' lives in the amount of their loans. Commercial banks, savings and loan associations, credit unions, finance companies and retailers are examples of the types of companies that would purchase such coverage. Individual insureds pay the premia and choose which insurer to use. Each borrower may purchase insurance only up to the amount of his or her indebtedness. Creditor companies typically must have at least one hundred debtors per year, though requirements may vary by state law.
  • Blanket Life Insurance: a form of temporary coverage, blanket life insurance covers groups of people exposed to a common hazard. Coverage is automatic for the time during which the individuals in question are participating in the hazards specified in the blanket policy. For example, an airline may own a policy to cover its passengers for the duration of the flight; a sports team may cover its members while they are engaged in team play; a newspaper may offer coverage for its carriers. Individuals do not receive certificates of coverage and are not named in the policy.
  • Multiple Employer Trusts (MET): this sort of arrangement enables small employers to obtain group benefits for their employees. Coverage may be for one or several types of benefits (life, medical, disability) or even alternative forms of the same coverage (comprehensive or basic group health insurance). The employer must subscribe to the trust and receives a joinder agreement evidencing such membership. The employer and trust are the parties to the arrangement, not the individual insureds. Self-funding or a life insurance contract are the two means of providing benefits. If life insurance funds the contract, the trust is the master contract holder. The employees receive a master certificate outlining coverage. METs may use either a third party administrator or life insurance company for plan administration.
  • Multiple Employer Welfare Arrangements (MEWA): this is a type of multiple employer trust for labor unions that self insures and has tax-exempt status.
    • Benefit Determination: the employer determines benefit schedules according to
      • Earnings: coverage could be a flat amount or percentage of earnings (e.g. coverage equal to 1 ½ times one's salary)
      • Employment Position: in this sort of arrangement, the amount of coverage is positively correlated with the employee's status, e.g. staff may receive $40,000 of life insurance, while senior management at the vice president's level may receive $100,000 or more of coverage.
      • Flat Benefit: all employees have the same amount of life insurance coverage, irrespective of compensation or status within the company. Such arrangements are common when the coverage offered is small.
Income Tax Implications of Group Life Insurance

Related Articles
  1. Financial Advisor

    Who Should Buy a Guaranteed Issue Life Insurance Policy?

    Guaranteed issue life insurance policies have added costs and reduced benefits that make them suitable for only a limited pool of buyers.
  2. Insurance

    Term Life Insurance: Everything You Need to Know

    Term life insurance is an affordable way to financially protect your loved ones after your death. Here's what you need to know before purchasing a policy.
  3. Insurance

    Which Life Insurance Option Is Best for You?

    If you're considering life insurance, you'll need to figure out which policy is best for you.
  4. Insurance

    4 Things That Keep You From Getting Life Insurance

    We look at four common reasons people give for not applying for life insurance, and see if they're legitimate.
  5. Insurance

    Why Your Company Insurance Coverage Isn’t Enough

    Even if you have group life or disability insurance, it pays to have individual coverage too.
  6. Managing Wealth

    6 Insurance Policies That Protect the Wealthy

    Here are six types of insurance that the wealthy use to protect their assets.
  7. Insurance

    Understanding Taxes on Life Insurance Premiums

    Learn about the tax implications of life insurance premiums, including when they might be taxable and whether they are tax deductible.
  8. Financial Advisor

    Is Life Insurance From Your Employer Enough?

    Covering the needs of the ones you would leave behind is not easy. But efforts to secure a life insurance policy outside of work should pay off.
  9. Insurance

    Life Insurance Decisions Made Easy

    These steps can help navigate the process of selecting a life insurance policy.
  10. Retirement

    Understanding Different Types of Life Insurance

    Understand the various types of life insurance, how each can be used in personal or business financial planning, and for whom they are best-suited.
Frequently Asked Questions
  1. Why Do Brokers Ask for Personal Information?

    There are 3 reasons a broker needs personal information: suitability, record-keeping and the law.
  2. How to Get a Company's Prospectus

    Obtaining a company's prospectus—or other financial documents—is now a simple online task.
  3. What Is a Blank-Check Company?

    A blank-check company has a business plan based on a merger or acquisition with another company.
  4. How do central banks inject money into the economy?

    Central banks use several different methods to increase (or decrease) the amount of money in the banking system. These actions ...
Trading Center