Offering Life Insurance for Your Employees
Most employers know that employee benefits packages provide a lot of perks. They offer security for employees to protect themselves and their loved ones. Employers typically offer things like health insurance, 401(K) plans and more. One particular type of benefit some employers offer is life insurance.
Life insurance can compensate survivors if the policyholder dies. As a result, it’s a valued piece of protection for many Americans. If you plan to offer these policies to your employees, think about the options you have through which to do so.
The Benefits of Life Insurance
Think about life insurance in context of one of your employees. They work hard to take home a paycheck to their family. Should they die, you won’t pay them anymore. Still, as a result, their income might dry up. Should this happen, the employee’s survivors risk of struggling to make ends meet in the future. They relied on the deceased for part of their income. Now that it’s gone, they might not have a way to easily replace it.
However, life insurance can help ease some of these burdens. The policy will likely provide a death benefit to the beneficiary listed on the insured’s policy. With life insurance, survivors might be able to pay off debts and continue their lifestyle as they recover from the death.
Determining How to Offer Life Insurance
If you decide to offer life insurance for employees, it might benefit their security. However, the policies you might decide to offer come in different shapes and sizes.
Usually, employer life insurance policies come as standard group policies. In most cases, it will come as a term policy. The employer will renew the policy as the term ends (most terms last a year). The policy usually will often provide two to three times the employee’s annual salary. In many cases, employers pay the full premium cost for this coverage. In others, the employee pays a portion of the premium and the employer covers the rest.
Some employers offer supplemental life insurance to employees as well. This will allow the employee to buy extra coverage. It will provide an added level of insurance for those who wish to carry it. However, supplemental insurance will likely require the employee to provide extra information to the insurer. For example, they might have to provide a health questionnaire to get this coverage.
So, think about if you want to provide your employees with life insurance. Generally, you will need to take a comprehensive look at your business’s ability to pay for this coverage. Talk to an insurance agent and your financial teams to see if you can add this benefit to your employee package.