How to Offer Life Insurance as an Employee Benefit
Life insurance policies are incredibly valuable for both your company and your employees. They come in many different policy types, and each works to provide financial security for your employees. But the advantages of investing in life insurance are not limited to your employees. In fact, your company can also benefit from your investment in group life insurance.
Let’s take a closer look at a few of the many different life insurance policy types that are available today, the benefits to consider with each policy and, a few questions to consider when looking for the right policy for your company.
What is Life Insurance?
Life insurance policies are a vital insurance type that provides those covered and their dependents with financial assistance in the case of the policy holder’s natural death, accidental death, injury, or illness. It can be used to cover a plethora of different costs, and is typically relied upon to pay for funeral arrangements, unpaid bills, and an assortment of other final expenses.
Types of Life Insurance
There are a few different types of life insurance policies that you can offer your employees including universal life, variable life, simplified issue life, and guaranteed issue life insurance. However, the most common policy types offered today are term life and whole life insurance, which are the two we will cover today.
Term Life Insurance
Term life insurance refers to a life insurance policy that covers a predetermined period of time. With this policy, your employee’s beneficiaries will likely receive a larger payout than a whole life policy would provide, but these policies by their nature are limited. Once the policy runs out, policy holders must re-qualify for it and may be rejected based on their current physical health. Additionally, every time the policy is renewed, premiums will likely rise as well.
Whole Life Insurance
Whole life insurance policies, as their name suggests, are policies that cover the holder’s entire life. They provide a significant amount of peace of mind for the holder’s family as coverage will not expire so long as payments are made. However, these policies are significantly more expensive than term life policies and have lesser payouts than term policies.
Benefits of Offering Life Insurance
There are several benefits to investing in life insurance benefit options for your employees. From their inexpensive nature for your business, to tax relief, better employee applicants, and peace of mind, let’s review a few of the reasons why you should invest in life insurance benefits today.
Policies Are Inexpensive
Investing in group life insurance plans for your employees is a very cost-effective way to provide additional employee benefits. That’s because group plans, unlike individual plans, have their risk spread out over the entire company or group body rather than on individual policyholders.
This means that your business will have both lesser risk and smaller payments on life insurance policies than they may face with other plans. Additionally, these plan types are quite popular and may be bundled with related insurance types, like health insurance, to provide you with a greater discount.
Better Benefits Promote Better Applicants
The better benefits you offer, the better applicants you will receive. Nowadays, employees are looking at job benefits just as much as–if not more than–the salary associated with their desired positions. And the benefits you do or do not offer can greatly impact whether the best candidates apply for your jobs.
Insurance is expensive for individuals, but offering group policies greatly lessens the financial strain that your potential employees will face when they have to buy life, health, or any other insurance type out of pocket. Additionally, offering these policies can boost morale among current employees and can also improve employee retention rates.
Employee Peace of Mind
Offering your employees group life insurance policies also gives not only them but their families a certain peace of mind that they may not otherwise have. Employees who are covered by these policies can be secure in the knowledge that their families will be protected in the event of their death.
Funds paid out of a life insurance policy can go a long way in reducing stress for the family during a time of grieving and adjustment periods. It can cover funeral expenses, basic costs of living for the dependents, household debts, and estate taxes. Additionally, it can replace lost income, fund children’s education, and supplement retirement savings, among others.
Questions to Consider When Offering Life Insurance
While life insurance policies are full of many amazing benefits for both your company and employees, there are a few factors you need to consider before choosing the right policy for you. Here are some of the most common questions you should consider before investing in group life insurance policies:
- Are all of your employees eligible for coverage, or only some?
- Will your life insurance policy automatically cover your employees, or will coverage be voluntary?
- Can employees purchase additional coverage or raise the amount of coverage they receive?
- How will coverage transitions work if your employees decide to leave your company?
Employee Benefits Made Easy
At Beckham Insurance Group, our knowledgeable and experienced employee benefits representatives are here to help make your benefits administration as easy and stress-free as possible. Contact us today to learn more about how we can help you build a competitive and comprehensive benefits program.
