Why employers should offer group life insurance policies

Why employers should offer group life insurance policies Most of us are familiar with life insurance being offered through our employer at work, but we don’t all know that it’s called group life insurance. We may not even care too much about what it all means, as long as we’re covered. But there’s a lot to know when it comes to a group life insurance policy and why your company should, if they don’t already, offer this life insurance option.


Group life insurance

So what is group life insurance exactly? Group life insurance is a single life insurance policy contract that is bought and has the ability to cover a group of people. The more common scenario in which group insurance is bought and distributed is that of an employer covering their employees. The policy will either require employees to pay some premium fee or nothing at all. But it costs a lot less than an individual insurance policy would. And while the employer remains the policyholder, employees receive a certificate of proof of insurance.  

Types of insurance employers offer

Most of the time, group life insurance is bought as a term insurance that expires at a specific date (and is generally renewed on an annual basis) – when you pass away or when your contract with the company ends and you no longer qualify as an employee for that company.

Group term insurance may not be as comprehensive as your individual insurance is, but that’s why it is sometimes a good idea to still have your own insurance policy for what the company’s insurance won’t cover. Now, what you as an employer can offer your staff ranges from general life insurance to funeral cover, accidental death and dismemberment, business travel accident insurance, bereavement counselling and spouse cover, just to name a few.

Be sure to do your research on different insurance companies and keep an eye out for what’s available. AUL, for example, has a list of potential coverage options for group insurance policies right there on their website. Consult your advisors and make sure you get the best possible deal and policy for your company’s workforce.

Benefits for the company

When we look at the reasons why your company should offer group life insurance, it can be argued from both the company and employee's point of view.

And that’s exactly what we’re going to do, starting with the benefits for the company.

Incentive: Everybody loves a little incentive, don’t they? If you’re in the process of recruiting or attempting to retain your star employees, then offering group life insurance serves as an incentive for them to start working for you and to stay working for you (unless they find a better offer somewhere else, but, hey, you can’t win with everyone).

Small expense: As far as benefits go, buying a group life insurance policy and paying the full premium for your employees is a small expense. And if you want to be considered a great employer and tick all the good boxes in the HR department, offering benefits is the way to go.

Tax benefits: The premiums you’ll be paying for your employees’ life insurance is tax deductible as a business expense. And that is never a bad expense to be paid. Benefits for employees But the whole reason why you would be offering group insurance is to benefit your employees. And they benefit in more ways than merely having life insurance coverage.

Peace of mind: Not every person can afford life insurance or wants to go through the whole process of getting life insurance for themselves. But what they don’t realise is, by having life insurance or even some sort of coverage, they can be at ease and have peace of mind for themselves and their loved ones, knowing that there are provisions should anything have to happen to them.

Less expense: It’s also less of an expense for them if they don’t have to worry about paying the full premium, which means there is less of an expense per month than what there would be if they took out their own insurance policy. Most of the time, they don’t even need to pay anything and there is no extra monthly expense for them.

Easy to qualify: Another huge benefit for employees is that it is relatively easy to qualify for term insurance. Generally, employees are required to fill out a health questionnaire instead of undergoing a medical exam. The benefit comes in where the results of a medical exam would either make them a high-risk client (where their premiums would be extremely high) or they wouldn’t even be able to qualify for insurance. So, having the safety of group insurance cover can really change their lives.  

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