You can offer a competitive salary and a great work environment, but employee benefits like group term life insurance can make or break a job offer for a prospective employee. Group term coverage is an excellent option for your employees and your budget, and it provides security to your employees and their families in an unexpected emergency.
Life insurance coverage is a key component of an employee benefits package. Group term life insurance is a single contract that covers multiple employees during a policy period. Because of this, life insurance companies can offer low premiums due to the spread of risk across a large group of people. Group plans are also cost-effective because they offer coverage for a set amount of time instead of an employee’s entire lifetime.
Because of its low price, employers frequently offer group term life insurance at no cost to their employees as an incentive for long-term employment. Employers can require that an employee reaches a certain status to become eligible for coverage, such as working full-time or completing ninety days of work. Coverage can be offered at a set limit or can vary based on an employee’s salary. Employees must designate a beneficiary to receive the insurance payout in the event of their death.
Whereas group health insurance requirements can be overly-complicated, group life insurance requirements are quite simple. Generally, group term life insurance plans are available to businesses with ten or more full-time employees, and the disbursement of life insurance coverage cannot be discriminatory. For example, employers cannot exclude employees from coverage based on gender or age, but they can impose coverage requirements across the board.
There are tax requirements for group term life insurance, but they generally favor the employee. Employers can offer up to $50,000 of non-taxable group term life insurance as part of their benefits package. Additionally, it is typically easier to qualify for group term life insurance than individual life insurance because a medical exam isn’t required to prove eligibility. As a result, group life insurance plans offer unmatched coverage to employees when it comes to cost and ease of access.
For your employees, group term life insurance is a cheap, easy, and tax-free employment perk. And for those employees that don’t already have a life insurance policy, it can be filling a critical coverage gap. Because group term life insurance spreads risk across an employee group and doesn’t require a medical exam, employees with serious medical conditions can also gain access to coverage that would usually be costly and hard to access.
There are a few cons of group term life insurance, however. The main drawback is the amount of coverage provided. $50,000 or less isn’t enough for most families to cover funeral expenses and lost income after an employee’s death. Employers can counteract this issue by offering supplemental coverage at a cost, or employees can choose to purchase their own individual life insurance policy.
Southpoint Insurance understands how important it is to reward your employees for their hard work and loyalty, which is why we work with the best life insurance companies to find options for your business. Our seasoned industry experts can help you decide on the right employee benefits package to fit your unique business needs so you can give back to your team.