It’s a call every business owner dreads: An employee’s spouse calls you tearfully on a Monday morning. One of your workers won’t be there anymore – he was killed in a car accident over the weekend. The next question she may have is this: “Was there any life insurance in place from work?”
It’s entirely within your power to answer her “yes.” And then go on to say, “Your husband loved you. Your photo is on his desk. You’re going to be ok.”
What Is Employer Group Life Insurance?
Employer group life insurance provides your workers an easy, convenient way to provide valuable life insurance protection for their loved ones at an affordable price – in some cases without regard to their medical condition or medical histories. Employees can sign up at work, doing the paperwork along with the rest of their benefit paperwork.
Advantages to You, the Employer
By adding life insurance to your list of employee benefits, you are sending a message to your work force that you care about their families, and intend to help make sure that your workers’ families are taken care of should the worst happen.
In certain circumstances, the premiums for up to $50,000 of term life insurance coverage are deductible as a business expense. It’s not a huge amount, by life insurance standards. But it means a widow can spend some time at home with children, or provide her (or him!) with some breathing room to pick up the pieces and move on.
Group underwriting means all your employees can have access to this valuable benefit. Policy issuance is guaranteed for this kind of coverage (governed by Section 7702 of the Internal Revenue Code). You won’t have to look at an employee and tell them no, they don’t qualify.
If you want to offer additional coverage, or if your employees need more coverage, you can offer additional protection for your employees on a voluntary payroll deduction basis. This means additional protection for your workers’ families. Your employees sign up for this voluntary coverage. You deduct the premiums from their paychecks each month, and forward a consolidated premium in a convenient list bill.
Advantages to Employees
These days, people are used to getting their insurance coverage from work. Workers who have access to workplace life insurance plans are less likely to put off getting much needed coverage on the side.
Group underwriting can help make coverage more affordable for employees with medical issues that make it difficult or impossible to get affordable life insurance on their own.
Some policies are portable: If the employee leaves the company, he can take the coverage with him. This is crucial for people who have developed health conditions that would make them uninsurable prior to leaving the company.
For many of these plans, there are no upcharges for preexisting conditions.
Workplace life insurance policies frequently offer only a limited amount of coverage. This is especially true of guaranteed issue policies. Also, depending on the policies and carrier, group-underwritten workplace life insurance policies can be less portable than other kinds of life insurance policies. Your agent can work with you and your employees to combine a workplace group insurance policy and additional coverage on a voluntary basis to provide the best possible package, protection and value for your employees.
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