As businesses continue competing to attract the best talent and rise to the top of their industry, many companies are beginning to offer group life insurance as part of a benefits package. Usually this is an optional coverage and many times it is not offered to employees until they have been with the company for a certain period of time. If you or someone you know has the option of buying group life insurance, hopefully this information will help.
Usually, group life insurance policies offer employees a variety of different options including group health, group life, and long or short-term disability. For the most part, these will be offered as additions to a current health insurance plan.
The benefit of a group life insurance policy is the low premium rates an employee receives because the insurance company is looking at the overall risk of the group, assuming some individuals may not stay with the company through retirement, while others may opt out of the policy.
Keep in mind that while a group life insurance policy may be an added extra policy, it is usually not enough insurance to keep an employee from needing their own individual life insurance. This is because most group policies will set a cap at somewhere between $10,000 and one year’s salary.
Before signing on for group life insurance, you still need to be sure of what type of policy this is. In most cases, businesses offer term life insurance to their employees, with the insurance only good while the employee is working for the company. If it is part of a benefits package, you may be able to roll it into your own account after termination, but this isn’t always the case. Remember that the company actually owns the policy, so you will have to deal with this factor much as you would for a 401(k) or an IRA plan.
Offering group life insurance is completely optional but worth considering if you and your employees can benefit from the possible lower rates of insuring a group and as a competitive advantage for hiring talent. If you’re considering including life insurance in your employee benefit package you will have several coverage issues to consider, including whom to cover and the type and amount of coverage to offer. Your next step should be to reach out to CoverLink Insurance so we can help assist you with any questions, help you find an appropriate vendor and ensure that your plan is properly administered.