Group Life Insurance for Your Small Business
If you’re looking to make your company’s benefits package more competitive and offer your employees more value, then Group Life Insurance is a good choice. It sends the message that you care about your employees’ and their families’ wellbeing, and it can help to attract better job candidates.
What is involved in Group Life Insurance?
When you offer Group Life Insurance to your employees, it means that in the event of an employee’s untimely death, their family will receive a payout from the insurance company. Group Life Insurance goes well with other group plans, like health insurance and disability insurance. Offering benefits like Group Life Insurance has been shown to improve employees’ happiness and mental health, as they have less to worry about. It is also a factor in some job applicants’ decision process, making your company more attractive.
How is Group Life Insurance set up?
Your company will be sponsoring the Group Life Insurance, meaning that you pay a premium for each employee you want to cover. Each employee can choose one or more beneficiaries for their policy. Should the employee pass away, the insurance company will pay out money to the beneficiaries.
A group can be as few as two people, but with less than ten people in your group you must provide insurance for all of your full-time employees to make the group valid according to tax laws.
Generally, Group Life Insurance is set as term insurance, where your coverage is renewed each year. This means that as long as your employees are with the company, they are covered by the term life insurance.
Guaranteed issue policies
One benefit to Group Life Insurance is that the coverage is guaranteed issue. This means that unlike individual life insurance, where you must pass a health examination to qualify for coverage, insurance companies are willing to cover everyone in the group without an examination. Since it’s a group of people, the insurance company is taking less risk and therefore doesn’t require a medical examination.
Who pays for Group Life Insurance and how much?
In almost all cases, the company foots the bill for Group Life Insurance. The Bureau of Labor Statistics reported that in 2020, 95% of workers who were part of Group Life Insurance did not need to make contributions to their policy.
How much coverage should you offer?
The amount of coverage you should offer depends on which kind of coverage option you decide on. Most businesses choose between the multiple of salary benefit and the flat-dollar benefit. Each one is common for certain kinds of workers.
· Flat-dollar benefit – A flat-dollar benefit gives out one flat-dollar amount of money per employee. This type of benefit is commonly offered to those with low wages or part-time hours. The BLS reported the median flat-dollar benefit to be $20,000 in 2019.
· Multiple of salary benefit – The multiple of salary benefit is most useful with salaried employees. In most cases, the payout is either one or two times the employee’s annual salary. The majority of these policies are one time the salary.
Plan IV | Group Life Insurance & other group insurance policies for small businesses
At Plan IV, we want to help you give your employees the coverage they deserve. We offer fair rates so that small businesses can show their employees some appreciation through benefits that improve their quality of life and give them peace of mind, without stressing your company’s finances. We’re here to help you grow and help you keep your employees happy and protected.