Business life insurance works like personal life insurance in many ways, but there are key differences to consider. If you provide a group life insurance policy for your employees, most likely you want to offer a benefits package that provides peace of mind to your staff members and their families,while also making your company competitive in the marketplace.
The most effective group life benefits plan for your business will depend upon the size of your company and a number of other factors, which we’ll discuss on this page. If you would like immediate assistance with your questions about business life insurance, contact a Trusted Choice® member agent today. A local agent who specializes in business insurance and employee benefits can help you get the information you need and choose a plan that makes sense for your organization.
U.S. Life Insurance Statistics
- Only about 59% of adults own life insurance of any kind
- Only 35% of adults participate in a group life insurance plan through an employer
- An estimated 11 million households without life insurance have children under 18 years
There is a huge need for company life insurance coverage to fill these gaps. If you purchase a group life insurance policy for your employees, your business will add an attractive benefits plan to your compensation package.
Advantages of Offering Group Life Insurance Plans
One of the reasons so many families go without life insurance is because they fear they cannot afford it. The good news is that group life insurance for you, the employer, is very reasonably priced. In the event that one of your employees passes away unexpectedly, a group life insurance plan will provide compensation to your employee’s family.
The sense of safety and peace of mind that you’ll provide to your employees with group life insurance can translate into better company morale and a reduced turnover rate. You can deduct the costs involved in providing business life insurance on your federal taxes, another advantage to you as the employer.
Should You Offer Term Life, Permanent Life or Both?
There isn’t just one right way to provide life insurance benefits to your staff. As you review life insurance companies and the options they provide for employee life insurance, you will find that you can structure your plan as you wish. You can purchase one or both types of life insurance, as well as options for your employees to purchase additional coverage through the plan.
Depending upon the size and resources of your company, you may want to provide any or all of the following:
- An employer-paid term life plan
- A supplemental employee-paid term life insurance option for increased coverage
- A term life plan for dependents and domestic partners
- A shared-cost or employee-paid permanent life insurance policy, such as group universal life insurance
- Supplemental coverage options such as accidental death and dismemberment
When employers begin researching benefits, it is typically a lengthy process. You will need to assess various plans and options, and compare the costs and affordability of the plans for both your company and your employees. However, once you assemble a high quality employee benefits program, you will most likely see a pay off, both in the short and long term.
Job seekers today review the benefits package of any employer they are considering. Offering your employees a quality life insurance plan can help to attract good talent, and can also help to retain your employees once you have made the investment in their professional training and development.
An independent agent in the Trusted Choice network who specializes in business insurance and employee benefits can provide personal assistance as you determine the life insurance benefits you would like to provide. These agents can help you compare several different plans from multiple insurance companies and make an informed decision that makes the most sense for your business.
Business and Group Life Insurance Frequently Asked Questions
Once you have settled on the life insurance program you want to provide, a plan administrator will help you with all of the implementation details. Most group life insurance companies offer customer support services both to employers and their staff.
You and your employees will likely have questions about life insurance coverage. Some of the most common questions are covered in the following FAQ. Note that all examples below are for illustration purposes only, and are not representative of the options or restrictions associated with any specific plan.
Group Life Insurance FAQ:
- What is the limit on the amount of term life insurance an employee can buy through the business life insurance plan? The coverage limit will depend on the policies and features you choose for your benefits plan. Many employers choose to provide automatic basic life insurance coverage to all employees, with additional optional coverage chosen by the employee in order to increase the life insurance benefits. As an example, your basic or standard plan might provide $10,000 in term life insurance benefits, with an option to purchase additional term life insurance in $1,000 increments.
- Do group life insurance plans require a medical exam? Basic group life insurance plans do not typically require a medical exam. Risk is spread across the employee base with relatively low limits, and no underwriting is involved. If the limits are set higher than the standard – over $50,000, for example – the employees will need to fill out a health history questionnaire providing information on any medical conditions. Plans with high limits may require a more extensive review of the employee’s health history and/or a health examination.
- Do company term life insurance policies stay with the employee if that employee leaves the company? Typically group life insurance plans are left at the door, which means that to retain life insurance benefits the employee must find a new life insurance plan outside of the job. Group life plans are designed specifically for groups of individuals, and cannot be extracted as a singular plan. However, some plans allow the employer to offer the employee the option of converting the term policy to a permanent policy for a price.
- What happens to an employee's plan if that employee becomes disabled? Under this unfortunate circumstance, the employee's life insurance will continue even if he or she can no longer work. You can choose to waive premium payments, which will not impact the benefit status.
- Can the employer offer life insurance benefits to some employees and not others? Yes, but with restrictions. Employers must not discriminate against certain employees, or certain classes of employees. However, the employer can choose to offer life insurance to a certain qualifying segment of their staff, such as all full time exempt individuals, as long as that group amounts to at least 70 percent of all employees. You can also offer incentive plans to smaller groups, such as employees who have been with the company for a certain number of years. The life insurance plan administrator you work with will be able to provide details on the non-discrimination restrictions.
- What does group life insurance cost the employee? Group life insurance rates for employees vary tremendously based on several different factors. Often the employer offers the basic term life insurance plan at no cost to the employee, with the option to increase the coverage at a very reasonable cost. Variables that affect the rates the employee will pay include whether the employee chooses to increase the coverage amount, whether the employer offers a permanent life insurance option, and what percentage of the group life insurance plan costs are covered by the employer.
- What does group life insurance cost the employer? The costs involved in offering a group life insurance plan also involve many variables. For example, the cost to the employer can start as low as $1.00 per month, per employee, for a basic group life policy providing $10,000 in term life insurance coverage. The costs will increase as you ratchet up the coverage amounts and add other forms of life insurance such as whole life or permanent life insurance, as well as coverage like accidental death and dismemberment.
- As an employer, how can I save on my employee life insurance costs? There are many ways to keep your costs down while still offering an excellent plan that attracts high quality employees and management talent. Everything from carefully choosing the coverage you offer to requesting discounts based on the health profiles of your employees will help you manage your financial obligation. An independent agent in the Trusted Choice network can help you review a range of plans and options to find one that offers excellent coverage at an affordable rate.
It is important to know that there are savings to be found within every plan, and your independent agent can help you get the complete information you need to assemble an excellent group life insurance offering that is right for your budget.
How to Compare Quotes and Select the Right Life Insurance Plan
The complex number and variety of company life insurance plans can make it feel like a daunting task to review policies and select the right group life insurance benefits for your business. This is where an independent agent in the Trusted Choice network can help. By working with a member agent who is well-versed in group plans, you will have the opportunity to compare company life insurance policies and choose the best fit for your needs.
Additionally, Trusted Choice member insurance agents who work in commercial insurance can help you get all of your business insurance even if those policies are offered through several different insurance carriers. Find a local member agent today and get personalized assistance with your business coverage and group life insurance needs.