Group Life Insurance: Should Your Company Offer it?
Are you considering offering your employees life insurance? If you are, you probably have questions about group life insurance that need to be answered. Life insurance is important, without it, it can be hard for a person’s family to stay afloat financially in the event of a death. If you are currently on the fence about offering life insurance to your employees, the following information may help steer your decision.
What is a Group Term Life Insurance?
Life insurance is a common employer-provided benefit in the United States. Employers often have a variety of choices to offer their employees. In some cases, employers offer life insurance plans that pay 100% of the cost of the life-insurance – this is known as a non-contributory arrangement. In other cases, employers are responsible for sharing some of the costs in what is known as a contributory arrangement. The amount of life insurance is either paid out in a flat dollar amount or incrementally over a set period.
In general, term life premiums are lower than premiums for other types of life insurance that accumulate cash value. Under a term life policy, the insured person only pays for the cost of keeping the insurance policy in force – this amount usually depends on the age and health of the insured. If the policy is renewable, the cost of insurance is calculated at the time of application, and the cost increases as the insured person ages since the risk of death increases with age.
Group term life insurance is offered to employees through an employer. Employees pay a certain amount (or some don’t have to pay anything) to have coverage. Employees usually have the option to enroll during an annual enrollment period and when they are first hired.
Is Group Term Life Insurance a Good Idea?
There are numerous advantages of providing group life insurance to your employees, including the following:
- Low-cost coverage even for employees paying 100% of their costs
- Protection for individuals who may not be insurable for health reasons (Overweight individuals and those with pre-existing conditions often have difficulty finding coverage)
- More affordable options for older employees
- The first $50,000 of employer-paid group term life insurance is excluded from taxable income
Group life insurance may also allow greater flexibility. For example, employees may be able to still apply for and receive coverage outside of enrollment periods.
Contact Moody Insurance Today
Moody Insurance Worldwide, a division of Moody & Associates that was founded in 1914, is a leading provider of risk management programs and insurance coverage to individuals and businesses across the East Coast. We write all sizes of businesses, with technical expertise in many key industry areas, and provide personal insurance programs for estates and high net worth individuals. Our licensed, experienced commercial account managers can work with you to determine the coverage that you need at a competitive rate. Contact us today at (855) 868-0170 to learn more about what we can do for you.