If you want to offer your employees another workplace benefit, consider group life insurance. These plans make it easier and less expensive for your employees to sign up for coverage. We’ve covered the way these plans work so you can decide whether it’s right for your organization.
Group Life Basics
With group life insurance, your employees can buy coverage through your company plan rather than going out and buying insurance on their own. Your company may be able to sign up for group life when you have as few as two employees, though most companies that sign up have at least 10 employees, according to the American Institute of Certified Public Accountants.
The main benefit of group life is it’s easier for people to qualify. There’s usually no medical exam, so employees can qualify even if they have preexisting conditions. Insurance companies waive this requirement because they make more money by covering a group of people all at once. This extra buying power also earns a discount so group life is less expensive than individual life insurance.
When you set up your plan, you need to decide how much coverage to offer. One option is to provide a multiple of salary, such as every employee can get one year or three years. Another possibility is to offer a flat amount, such as everyone getting $20,000.
You also should decide what type of life insurance to offer. Term is a popular choice, as it’s temporary insurance with a set expiration date, like in five years or when the employee leaves the company. You could also offer more expensive, permanent coverage that lasts their entire life. Other possibilities include policies that only cover accidents or only apply when the employee is traveling for work.
Insurance companies set their rates based on an employee’s age. Older employees pay more per month than younger employees. They also set up your group rates based on information about your company.
First, they’ll look at the number of people in your company. A larger workforce leads to lower rates. They’ll also look at the average age of your workforce. If you have an older staff, your average premiums will be more expensive, however, this won’t stop employees from qualifying.
The insurance company will consider the occupations at your company, with higher premiums for a more dangerous field like construction.
Paying for Coverage
You can pay for the premiums yourself. You can also divide the costs with employee, such as you pay for the first $20,000 of coverage and they can pay for anything beyond that. Finally, you can ask employees to pay everything for coverage. Even if employees pay for the full amount, they still benefit because of the group life price discount.
Your employees need life insurance, and with group life, you can make it easier for them to get insured. It’s an affordable workplace benefit that they’ll appreciate.
David Rodeck is a professional freelance writer based out of Delaware. Before writing full-time, he worked as a health- and life-insurance agent. He specializes in making insurance, investing and financial planning understandable.