Group term life insurance is an attractive addition to an employee benefits package. It is generally very affordable for employers and advantageous to employees. In today’s competitive job market, offering employer-provided group term life insurance is a cost-effective way to show employees care about their well-being and increase job satisfaction.
What Is Group Term Life Insurance?
This type of life insurance is provided to employees by their employers, typically at little or no cost to the employee. Term life insurance provides coverage for a specific period, usually for the duration of employment. Unlike individual policies, group term life insurance pools the risk among an entire group of people, which is why it is more affordable.
Employers can choose from different benefit plans. Death benefits may be a fixed dollar amount, such as $50,000, or the plan may tie benefit amounts to a multiple of the employee’s annual salary. In some cases, employers may provide a base amount of coverage and allow employees to purchase additional coverage at their own expense. Premiums for supplemental coverage under a group plan are typically lower than for individual life insurance policies. Most group term plans do not require health assessments, and coverage is not contingent upon the results of a medical exam.
What Are the Key Features of Group Term Life Insurance?
Here is a summary of the key features of group term life insurance:
- Affordable life insurance: Many employers pay the full cost of a basic coverage amount, making it a no-brainer for employees to enroll. Because risk is distributed among a group of people, these plans are inexpensive for employers.
- No underwriting: Typically, there is no medical exam or lengthy underwriting process. A group term plan makes life insurance accessible to employees who might otherwise have trouble obtaining it.
- Supplemental coverage options: Many group term life insurance plans offer employees the opportunity to increase their coverage and, in some cases, extend it to family members.
- Temporary coverage: Group term life insurance usually ends when employment is terminated. For this reason, it is not necessarily a substitute for individual life insurance.
- Limited coverage: These insurance policies may cap coverage at a multiple of the employee’s salary, which may not be sufficient to meet a family’s financial needs in case of an unexpected death.
What Are the Benefits of Group Term Life Insurance for Employers?
Including group term life insurance in an employee benefits package is a strategic move for employers. It can set your business apart in a crowded job market and help you attract and retain top talent. It can provide employees with peace of mind and boost morale, translating into greater productivity and job satisfaction. Group term life insurance is an inexpensive way to offer employees a high-value benefit. Premiums are lower because risk is spread across the group, and they may be tax-deductible as a business expense.
Meet with our knowledgeable agent to discuss group term life insurance. We can help you tailor an affordable employee benefits package to give your business a competitive edge.