For many adults, the only life insurance policy they have is through their employer. Offering a term life insurance option to your employees as a benefit shows your workers they are valued, while giving employees the ability to protect their loved ones should they die while in your employ.
Types of Term Life Insurance Policies
Group-term life insurance policies are the most commonly offered type of employer-provided life insurance in effect for a defined period of time. When employer-provided, the term is typically the length that the employee is employed. There can be options to convert a group-term life insurance policy into an individual policy, should this be necessary.
There are various types of term life insurance policies. The most common include:
• Employer paid: Employer-paid term life insurance works similarly to group health insurance. The employer purchases a single policy that covers all participating employees. This type of policy requires the employer to pay just one premium, not a premium per employee.
• Employee paid: You can provide your employees with access to a standard amount of term life insurance coverage without paying any portion of the premium. Employees have the option to purchase additional insurance benefits, up to $50,000, using pre-tax dollars. Purchasing any supplemental coverage over $50,000 will incur a tax. In this situation, additional coverage may require a medical exam to confirm eligibility.
• Contributory: This term life insurance option is a combination of employer paid and employee paid.
Term life insurance as part of an employee benefits package is typically attractive to most employees since the cost is lower than purchasing an insurance policy on the open marker. Employees do not need to undergo underwriting and avoid feeling penalized or getting denied for coverage for having a chronic or pre-existing condition whether they have employer paid or employee paid group-term life insurance.
Considerations when Providing Group-Term-Life Insurance
As an employer providing group term life insurance, you must determine who should be covered, the type of benefits you will offer, and the optimal and most affordable amount of life insurance to offer.
• Who should be covered: Group-term life insurance benefits can be offered to all full-time employees. Insuring a larger group often guarantees lower rates and eliminates the need for qualifying medical exams. Term life insurance can be made available to a few key employees as a special benefit, though in this event nondiscrimination requirements must be met. Sub-groups of employees can also be offered coverage based on compensation, length of service, job duties, and participation in other employer benefits. It is up to you as an employer to decide if life insurance can apply to retirees of your company.
• What benefits should you offer: To some degree, group-term life insurance plans can be customized. Other types of insurance benefits can be offered, such as group accidental death and dismemberment, business travel accident insurance, split-dollar life insurance, or life insurance plan riders.
• What is the most optimal and cost-effective option: Typically, group-term life insurance policies offer a set amount of insurance or they are calculated based on an employee's salary. In some cases, an employee's age can be determinant in coverage amounts.
The Administration of Group-Term Life Insurance Plans
Finding the right vendor and making sure your group-term life insurance plan is properly administered are critical, and that's where The Benefits Group comes in. Our experts will pair you with the right term life insurance carrier so you and your employees feel fairly and generously protected.
The Benefits Group will help you determine the right company, agent, type of insurance, and insurance amounts you want coverage for to pair you with the best insurance liaison. Ideally, group-term life insurance benefits do not generate many claims, so these policies do not require a great deal of work on the part of the employer.
Contact The Benefits Group today to discuss your options for securing group-term life insurance coverage for your employees.
Getting A Quote
The simplest and easiest part is getting a quote using the Term Life Quote Engine. Once the information is completed on the input page and the "Get A Quote" button is clicked, the product comparison page is displayed. The first thing noticed, there are four rate classifications shown in each product strip. After the underwriting process is complete, the applicant can expect to receive an offer of one of these underwriting classifications from the insurance carrier if the application is not rated or declined.
Need help to determine the amount of coverage needed to protect your family? This simple-to-use calculator is designed to help you step through the process