Wholesale life insurance is a type of group life insurance that is intended to cover a small group of employees who work for one employer. Employers who purchase regular group life insurance own the insurance policy, whereas wholesale life insurance policies are owned by each employee once they apply and are approved for a polity. However, to qualify for wholesale life insurance, employers must pay a portion of the individual premiums.
Small businesses that have few employees may not be eligible for regular group insurance because the group isn't large enough to underwrite a policy. Wholesale life insurance policies typically are sold for businesses that have five to 50 employees. To qualify for wholesale life insurance, there must be a minimum of five employee policies. Employers who qualify for both regular group and wholesale life insurance may choose wholesale policies because the premium payments made by the employer may be more cost effective.
Employers can use wholesale life insurance policies as part of an employee's benefit package. For example, an employer may agree to pay for the entire premium for the employee and allow the employee to purchase additional wholesale life insurance policies for a spouse and/or dependents. However, it is important to keep in mind that wholesale life insurance is not automatically given to all employees and their family members. Each person who wants wholesale life insurance coverage must apply and be approved. Approval may require a physical exam and submission of the applicant's full health history.
Wholesale life insurance generally is term life insurance, which means the policy is effective for a certain amount of time and then must renewed. Most companies and businesses purchase a 10-year group term life insurance policy; however, since wholesale life insurance policies are individually owned, each employee may choose the term of the life insurance policy. It's important to know that when it comes time to renew the life insurance policy, premium amounts may increase. As with regular group life insurance, wholesale life insurance policies typically have a predetermined death benefit. However, policy owners may choose beneficiaries and how the death benefits are paid, depending on the underwriter.