Under group life insurance an employer signs a master contract with the insurance company outlining the provisions of the plan. Each employee receives a certificate that provides evidence of participation in the plan. The amount of insurance depends on the employee's salary usually the employer pays a portion of the premium and the employee pays the rest, but sometimes the employer pays the entire cost of the plan.

A major advantage of group life insurance to an employee is that usually coverage may be obtained regardless of health. The premiums on group life insurance are considerably less than on comparable individual policies, mainly because the selling and administrative costs are minimal.