Your Guide to Finding the Best Group Life Insurance Policy

Wednesday, August 31, 2022 22:00 Posted by Admin

Building a solid employee benefits package is one of the best ways to attract quality talent to your company. The more benefits you offer, the more likely it is good candidates will apply for an opening. A solid benefits package also keeps existing employees motivated and happy, making them more productive.

The question is what should your benefits package include?

You may have some of the more obvious benefits, such as bonuses, annual raises, and paid vacation time. However, ideas that relieve the burdens your employees face in their personal lives are just as effective.

Group life insurance is a good example.

Even basic group life insurance provides coverage for your employees and their loved ones. This article explains what group life insurance coverage is, the types, what it covers, and how to find the right policy for your company.

What Is Group Life Insurance?

Group life insurance plans are offered by employers and other large entities to provide life insurance to a collection of people. Many companies use them as part of their benefits packages. Employees often prefer group life insurance because it tends to come with lower premiums than individual life insurance.

These lower premiums often come as a cost.

Group life policies usually provide lower coverage amounts, meaning that a group life insurance payout usually won’t be as large as the payout from an individual policy. But this is balanced out by the fact that most employees won’t have to undergo a medical examination before being accepted onto a group policy. Those with existing conditions may find that a group policy offers coverage where an individual policy can’t.

This isn’t to say that group policies have no entry criteria. Employers may require people to work for them for a set amount of time before granting access. Furthermore, the coverage is generally only valid for as long as the individual is a part of the organization that pays for these premiums.

The Types of Group Life Insurance

There are two main types of group life insurance:

  • Group Term Insurance
  • Group Universal Life

Group Term Insurance

Any term-based life insurance policy renews yearly. This type of policy is inexpensive and provides minimal benefits, with many only paying out a death benefit if the employee passes away. The inexpensive nature of these policies leads to many employers providing them at no cost to employees. Group term life insurance can also offer supplemental coverage for employee spouses and dependents, though this usually raises the associated group life insurance premiums.

Group term insurance is extremely common, with about 80% of U.S.-based employers offering it. Employees typically have to work for a company for at least 30 days before being added to this type of group policy. Members of the policy should also receive certificates of insurance that they can use as proof of their coverage.

Group Universal Life

Group universal life is a form of group permanent life insurance. Participants receive coverage and the ability to grow or invest their savings through this type of policy. Premiums are generally lower than individual policies, though they’ll likely be higher than those found in term insurance. As such, many employers split the costs of the premiums with their employees. If employees have to pay part of the premiums, they do so through pre-tax payroll contributions.

The money paid into the account can be withdrawn at any time. However, the savings component promotes leaving the money in the account to accumulate interest. Group universal life insurance pays a death benefit in addition to its saving component. Employers can also offer their people the option of a variable group universal life policy, which adds an investment component that may allow employees to increase their cash reserves faster.

What Does Group Life Insurance Cover?

Group life insurance plans generally provide a death benefit to an employee’s spouse and dependents upon their passing. They may also offer basic coverage for spouses and dependents, though this is not a given. As mentioned, universal policies incorporate a savings or investment component that can help the employee develop a nest egg for retirement or increase their death benefit payout.

The death benefit varies depending on the policy. Those offering basic coverage may provide a set payout of around $50,000 or pay out one or two times the employee’s annual salary. Some policies pay more, though this comes at the cost of higher premiums.

Unfortunately, most group life insurance policies don’t tend to include additional benefits. Employees are unlikely to get cover for terminal illnesses or disabilities that leave them unable to work. Furthermore, employers control the policy, which means employees can’t make changes without authorization.

Find Good Group Life Insurance Plans – The Tips

Now that we have a general group life insurance definition, it’s time to look at how to find the right policy for your company. Serving your employees’ needs is a key priority here. But as a business owner, you naturally want to keep costs as low as possible. These tips help you to find a suitable policy from a reliable insurance carrier.

Tip No. 1 – Ensure You Qualify

Group life insurance cover is available to the majority of companies. But very small companies may not be able to access it. If you have fewer than three employees, most carriers won’t offer coverage. You may find that some insurance companies implement higher minimum employee counts.

Thankfully, you have other options if your business doesn’t qualify for group cover. These include keyman insurance and shareholder protection insurance, both of which are individual policies you can use to offer cover to key members of your team.

Tip No. 2 – Know What You Want to Offer

Do you want to ensure all employees have access to basic life insurance? Perhaps you want to offer a savings or investment component in your group policy. You need to understand what your group insurance should offer before you begin your search.


It could cost more.

If you intend to pay the policy’s premiums yourself, offering more features or higher payouts means your company spends more money each year. Of course, you can mitigate this by splitting the costs with your employees. But doing this means the group insurance seems less beneficial to employees because they’ll need to pay out of their own pockets to access it. Still, employee premium payments coming from pre-tax earnings may help your business to market the group insurance as part of an employee’s tax strategy.

You have several decisions to make before deciding on a type of group policy insurance. Consider speaking to your team to get feedback on the type of cover they’d prefer to have.

Tip No. 3 – Set a Budget

Assuming your company will pay for premiums, you need to set a budget to ensure the money you spend on a group policy doesn’t cause financial issues elsewhere. Premiums vary depending on several factors, including the type of insurance and the compensation offered by the policy. For example, monthly premiums for an employee who earns $50,000 per year will likely be about $25 per month for a basic policy. Expect to pay approximately double that for employees earning $100,000, and so on. This might not seem like much, but it adds up if your company has a lot of employees.

By having a general understanding of the amount you’re likely to pay for your entire workforce, you can set a budget for group life insurance. This allows you to eliminate companies from your search if they don’t fall within that budget.

Tip No. 4 – Get Recommendations

Do you know any business owners who offer group life insurance to their staff? Speak to them. Ask them about the policies they have, the costs, and how well the companies providing those policies serve their customers. It’s also worth asking about the paperwork involved, especially when it comes to payouts. A carrier offering attractive rates may not be worth your time if they make it difficult for your employee’s beneficiaries to receive death benefits.

You can also use these conversations to learn about group life insurance characteristics. Ask about what your contacts get from their life insurance policies. What are the death benefits? Are there any added perks? If so, how much extra do they pay in premiums? If any split the premium payments with employees, it’s also worth asking about how employees feel about paying part of their insurance premiums.

Tip No. 5 – Compile a Shortlist

After your conversations with other business owners, you should hopefully have a small list of potential group life insurance providers. Now, it’s time to build that list out. If you want to do this yourself, a few targeted Google searches usually provide useful results. Check websites that discuss what different carriers offer in depth. Use this information to create a list of carriers that may be able to provide what you’re looking for.

What if you don’t want to do the research yourself?

Consider using an insurance broker to handle the hard work for you. Brokers are professionals who help companies find the best insurance policies available. They have contacts within the industry, meaning they may be able to offer access to wholesale policies you can’t find on your own. Just remember that brokers tend to receive commissions when they sell policies. You need a broker with a wide network who aligns with your company’s best interests if you go down this route.

Tip No. 6 – Check Online Reviews

The combination of sourcing recommendations and searching online should leave you with a decent list of potential providers. But before you start gathering quotes, you have to do some research. Google is your friend again here, as is social media. Check out the reviews that existing customers leave for the provider. Don’t limit your search to the carrier’s group life insurance policies either. Most providers offer several types of policies. The reviews for those offer just as much insight into how the company deals with its customers as reviews for their group insurance plans.

You’re obviously looking to see far more good reviews than bad ones. But when you find negative reviews, try to identify themes. For example, you may find that most of the bad reviews mention a lack of communication or complications with claims. These are both major issues that may make a carrier less reliable than it markets itself as.

It’s also worth checking how the provider responds to negative reviews. Does it have a customer service team that tries to resolve the issues highlighted in the reviews? If it does, that’s a pretty good sign that that provider tries to work with customers to fix their problems. Carriers that don’t respond to reviews or that tend to argue against the negative feedback are often more problematic.

Use reviews to eliminate providers that seem unreliable or appear to have poor customer service.

Tip No. 7 – Collect Quotes

With your shortlist whittled down, you should have a collection of providers that you believe can provide what you’re looking for.

Work through your list and start gathering quotes.

Contact each provider and tell them what you’re looking for. Collect quotes and compare them against each other. Using the general premium costs discussed in Tip No. 3, try to figure out which carriers charge too much and which are far below the average. The former will cause budgetary issues while the latter may be trying to undercut their rivals with subpar services.

It’s also important to confirm what you receive with each quote. You may find that a carrier gives you a higher quote because it offers benefits or a payout that’s larger than you require. Communicating with the provider may help you to access a lower quote for a policy that’s more in line with your needs.

Find the Best Group Life Insurance Policy

Offering group life insurance makes your company’s benefits package more comprehensive and attractive. Current and potential employees will be attracted to your business because they know their loved ones will be taken care of in the event of their passing.

But you have a lot of decisions to make about the type of group policy you want to offer and which provider to work with.

Trust Taylor Benefits Insurance Agency to help you make these decisions. Our insurance and benefits package specialists have over 25 years of experience in helping businesses choose insurance policies. We can also help you to integrate your company’s group life insurance into a larger benefits package to make your company more attractive to talented individuals. If you’d like to find out how we can help you, call us at 800-903-6066.

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