Key Factors to Consider When Offering Group Life Insurance

Monday, April 8, 2024 23:44 Posted by Admin

Several key factors influence business owners and HR managers when offering group life insurance benefits. For example, how can business owners best manage plans and costs? How important is life insurance to employees? What type of life insurance has the biggest appeal?

We’ve got answers to what companies need to consider when offering group life plans, and what firms and employees think about group life benefits.

What is Group Life Insurance?

Group life insurance is a popular feature in employee benefit programs. It’s a single contract covering an entire employee group and almost always costs less than what an employee pays for individual life insurance. The employer owns the policy and administers the plan provided by an insurance company.

Many employers provide group life insurance at no cost to employees as an attractive benefit because group plans are one of the lower-cost benefits to offer.

What Group Life Insurance Plans Are Available?

Three common types of life insurance are available – term, whole and universal life. When choosing the best group life insurance for your business, it’s vital to know which features matter most and the cost of providing them to your employees.

Term Insurance

Term insurance is popular because it has the lowest premiums, covering individuals for a fixed time and expiring at end of the term. Term insurance usually appeals more to younger employees depending on age and stage of life, though repurchasing a new term policy will cost more the next time around. Some term plans allow conversion to permanent coverage.

Because of its low cost, group term insurance is the most common plan provided by US employers. Term plans may also add features for accidental death and dismemberment, business travel insurance, and a unique plan called split-dollar life insurance where both beneficiaries and company are paid death benefits.

Whole Life Insurance

By contrast, whole life insurance is much more expensive but offers lifelong coverage and becomes an investment asset over time, paid out to your beneficiaries on the policyholder’s death. They also can be borrowed against or cashed in, and many employees prefer the hands-off nature and investment feature of whole life. In addition, whole life plans can include varying levels of employer-employee contributions.

Universal Life and Variable Life Plans

Universal life plans provide a fixed death benefit, and premiums vary depending on how well the investment fund component performs.

Companies can add “riders” – extra features to customize any group insurance plan. Understanding the unique characteristics and differences between insurance plans will help you choose a group insurance plan that’s best for your company and your employees.

What Matters Most About Group Life Insurance for Business?

Here are some questions to examine when choosing a group life insurance plan for your business. Cost, features, easy plan administration, and your insurance company’s reputation are all components to consider for a business owner or company.

There are other factors companies should consider when choosing a group life plan. Here are some essential questions to ask:

  • How much life insurance is the optimum?
  • Which employees should be offered life insurance benefits?
  • Are you clear on non-discrimination guidelines?
  • Are there any significant tax implications for both business and employees?
  • Which life insurance death benefits or payments to beneficiaries are tax-free?
  • Are life insurance premiums paid by employers tax-free for employees for coverage up to $50,000?
  • What employer tax credits and benefits are available for offering life insurance benefits?

For answers to these crucial questions, employers should seek expert advice from their insurance advisor in choosing a group life insurance plan.

What Matters Most About Group Life Insurance for Employees?

Life insurance is an attractive benefit for employees. Research by Harris Poll for OneAmerica found 68% of employees were somewhat or very likely to purchase life insurance if offered by their employer. That’s a powerful incentive for employee retention and recruitment.

More men (31%) than women (26%) said they have voluntary group life insurance through their employer. However, according to Harris, only 30% of participating employees said they had more than $100,000 worth of coverage, most likely because of tax reasons.

Harris found the key reasons employees purchased life insurance were to protect their family from future financial hardship (60%), followed by peace of mind (40%) and paying off debts and final expenses after passing away (40%).

Ready to Talk About  Group Life Insurance for Your Business?

As business owners, it’s important to note 46% of Americans do not have any life insurance. Offering life insurance in your benefits package is a powerful incentive for employees and recruitment.

We know employees place high value on life insurance. Taylor Benefits is a leader in designing attractive and cost-effective group life plans for businesses just like yours. We can help your business or your HR manager pick a group life plan that has the highest appeal to employees and fits within your guidelines on what’s affordable for your business. We’re easy to reach by calling 1-800-903-6066 or connecting with us through our Contact page.

Written by Todd Taylor

Todd Taylor

Todd Taylor oversees most of the marketing and client administration for the agency with help of an incredible team. Todd is a seasoned benefits insurance broker with over 35 years of industry experience. As the Founder and CEO of Taylor Benefits Insurance Agency, Inc., he provides strategic consultations and high-quality support to ensure his clients’ competitive position in the market.

We’re ready to help! Call today: 800-903-6066