Group Life Insurance is one of those benefits with advantages that every employee understands. Many companies will offer a basic amount (usually 1 or 2 times income) free to employees and make available additional amounts for the employee and spouse at a reduced rate. This group life insurance makes an excellent base for the household’s financial protection.
There are many benefits to this type of coverage but one of the best advantages is that since this coverage is that since it is a group product, it is almost always considered “guaranteed issued”. This means that the health history of the employee or spouse is not considered before issuing the policy. This is especially advantageous to older employees who may have current health issues. Most companies that participate in Group Life Insurance will offer either a Term or Universal Life product. However, not all companies will make this insurance portable. Therefore, if an employee leaves, the insurance coverage would not follow them.
Group Term Life Insurance
This insurance is purchased for a specific period determined by the employer but typically 15 or 20 years. This product will pay the death benefit only if the insured dies while covered by the policy. It builds no cash value and will expire at the end of the term.
Group Universal Life Insurance
The Universal Life policy offers the advantages of a Whole Life policy but priced moderately like term insurance. The policy will build cash value and earn interest over time that can be accessed by the employee through loans or partial surrender. This type of policy, if funded appropriately, will be a permanent insurance product that will not be outlived by the policyholder. If you offer this as a benefit, it is likely that all of your employees will readily participate in such a program due to the outstanding lifelong benefit of such a policy.
If you are considering a group life insurance plan for your employees, check with an agent with experience in setting up these programs. There are many great options available and an employer who can offer significant savings on something as valuable as life insurance will have better overall employee retention rates.