If you’re looking for a low-cost, high-value benefits product that can help you attract and retain employees, consider offering Group Life insurance coverage.
Here’s how these plans work: Because the overall risk of death among a group – defined as 10 employees or more – is far lower than that of an individual Life policyholder, the insurance company can offer you a far lower premium rate (the overall rate for your company depends on the group’s size and distribution by gender and age, together with the number of claims filed). You’ll pay a fixed premium for every $1,000 in coverage. Because Group Life is usually bundled with other benefits, such as health plans, your administrative costs will be minimal.
What’s more, unlike individual Life policies, coverage is written on a “guaranteed issue” basis, with no need for plan participants to pass a physical exam.
Group Life policies usually pay the beneficiary the employee’s salary for a full year. This provides a valuable short-term financial cushion for the loss of a breadwinner’s income. Some insurance companies offer extended coverage, with a death benefit of two or three years’ salary (and such add-ons as Accidental Death & Dismemberment and/or Travel insurance) to participants – usually managers or supervisors – who pick up part of the premium. This option also includes a portability feature that allows employees to keep their coverage when they change jobs or retire.
If you offer Group Life benefits, your insurance company will review the rates and terms every five years. It makes sense to re-evaluate your program whenever you’re planning significant changes in your workforce (hiring more employees, raising salaries, and so forth). You might well be able to enjoy improved coverage at lower costs.
As employee benefits professionals, we’d be happy to offer our advice on selecting a comprehensive, cost-effective Group Life plan.
