GROUPE LIFE INSURANCE

by Guest » Wed May 21, 2008 11:27 pm
Guest

I am a new Life Insurance Agent in Pennsylvania. During my prospection, I have been approached by the President of an Association of my community who need to buy life insurance for the members of his association. I told him that it is possible to buy a group life insurance (term), but I need to set an appointment with him and my managers to discuss seriously about the subject.

The association has a legal status, existed many years ago, have more than 50 members or adherents.

The Association presently provides its members with "legal, social, community and many other services" and funds such benefits through "membership dues, sale of tickets, memorable medals, souvenirs, and charitable donations." The Association would like to purchase a group life insurance policy covering its members and use the proceeds to "provide funding for the final expenses for its members, including better deals with funeral homes and buying lots at wholesale prices close to communities or sending the deceaded back home." In addition, it is anticipated that the proceeds of the policy would replace the dues income lost to the Association through the death of its members. The policy would automatically cover each member of the Association, and the Association would pay the premiums from members dues.


I have the following questions:

1. May an association purchase a group life insurance policy to cover its members?
2. How to quote this kind of policy?

Please advise.

Total Comments: 5

Posted: Thu May 22, 2008 03:57 am Post Subject: insurance

Hello, BILAL. Welcome to the forum. I'm sorry, but, I'm not an expert on insurance. I just wanted to let you know that someone ( one of our Experts..) should be along shortly. Also...you 'appear' as a 'guest' ( your ID, I mean). I think you should registar on the forum...just makes it easier for others to 'see' who they are talking to. Also.....if you want to PM (Private Message) someone, you can't do that unless you 'register'. I live in PA, as well. When you 'register', can you please tell me the name of your company? Thanks..and, again, welcome!!

Posted: Thu May 22, 2008 04:53 am Post Subject:

The association has a legal status, existed many years ago, have more than 50 members or adherents.


Do you mean that the legal status used to exist & now its extinct?
I have seen many cases wherein I found insurance cos. or even credit card cos. for that instance love to offer their products to a group of people. This is because of the guarantee that they obtain from a brand name if the brand name is doing well in the market. That goodwill would surely built up some trust. Also the sector that this brand is operating gives them a hint as to whether that sector has enough potential to lower their risks or not.
But as your post seems..if the brand name itself doesn't exist anymore then the chances of procuring coverage may get diminished. Am I right guys!
Plasmahectic

Posted: Thu May 22, 2008 05:01 am Post Subject:

Hi,
Its true that the group life & group health policies are quite common & ruling the global insurance market now-a-days. Thats what makes it considerably interesting to read the designs of different policies that are coming to the picture.

How to quote this kind of policy?


I could only say in this regard that insurance cos. would prefer to get hold of a group of prospects from one place. In doing so they might consider offering coverage to any established group at a lower premium rate than to the individual consumers. Pedro60

Posted: Thu May 22, 2008 11:28 am Post Subject:

I am a new Life Insurance Agent in Pennsylvania. During my prospection, I have been approached by the President of an Association of my community who need to buy life insurance for the members of his association.



First of all, you want to make absolutely sure that this is a legal "Association", formed under the laws of PA. If they are just now thinking about buying life insurance, it sounds like this may be a newly formed association. You need to understand "exactly" what the association's purpose is in the community and "exactly" what they do.

I know the excitement you felt when someone approached you about buying group insurance, but just keep it on a professional level.

I just read the part about "existing for many years", so now I'm a little confused as to why they have not purchased life insurance before.

The Association would like to purchase a group life insurance policy covering its members and use the proceeds to "provide funding for the final expenses for its members, including better deals with funeral homes and buying lots at wholesale prices close to communities or sending the deceaded back home." In addition, it is anticipated that the proceeds of the policy would replace the dues income lost to the Association through the death of its members.



With only "50" members, it would seem that the dues would be extremely expensive or they just don't make a lot of money from dues.

May an association purchase a group life insurance policy to cover its members?



The short answer is "Yes".

Many professional and fraternal associations have such an arrangement for their members.

You mention "term insurance", but does the association just want to provide life insurance coverage for "10" or "20" years? If the members buy term life insurance that will be just what they are doing, because I can almost guarantee you that noone will keep the policy past the initial term period.

On the other hand, by buying a permanent form of life insurance, the policy will remain in force until the association member dies, whenever that may be (as long as premiums are paid).

To accomplish what the President wants, the Association would have to be the "owner", "premium payor" and "beneficiary" of the life insurance policy. You need to check with the PA Department of Insurance to see if this arrangement is OK in PA. Most importantly, is it OK with the association members?

How to quote this kind of policy?



There are companies out there who will quote this case on a "Group Insurance" basis. You will need a group census, to include, dates of birth/ages of all members, smoking status of each member, and amount of insurance desired.
Some companies have "guaranteed issue" for a certain number of enrollees in a group. If you enroll all 50, it may all be guaranteed issue.
Just keep in mind, if this case is issued as requested, the Association will have the right to keep the policy forever, whether the member remains in the association or not. This could create difficulty.

Good luck.

Maze

Posted: Thu Jun 05, 2008 04:12 pm Post Subject:

An association can apply for a group life insurance for its members. And as far as I know, this is quoted based on the group. The premium payment for each person is the same and the coverage is also the same. Usually, Group life insurance is in the form of term life insurance. Of course it always depends on the agreement of the association an the insurance company. And because it is a group insurance, a member that will get out of the group will not be covered by the insurance policy. The premium on this kind of policy maybe lower because they are offered as term life insurance.

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