In the modern era, in order to attract the best employees it’s essential to offer an extensive benefits package.
While employers usually consider health insurance, 401(k) retirement plans, and paid time off to be the core benefits, adding group term life insurance significantly enhances the employer experience.
But what exactly is group term life insurance, and how can it benefit your team and business?
We’re here to break down all of the details. Let’s jump in.
Group Term Life Insurance Defined
Group term life insurance is simply a type of group life insurance provided by employers to their employees. Life insurance policies in general offer a financial safeguard to the families of the policy holder in the event of a death. When an untimely death occurs, life insurance policies will pay out the specified beneficiary with a lump-sum benefit. These policies cover a variety of expenses such as:
- Funeral expenses.
- Medical bills.
- Income replacement (debt, bills, mortgage payments and college tuition).
- Offers an inheritance.
“Term” life insurance is simply a specific type of life coverage, and just means that the policy lasts for a set period of years. When offering term life insurance to a group of employees, the policies usually remain active as long as the employee is still employed with the company. Offering life insurance in addition to some of the more typical benefits generally costs little to nothing for employees, adding on to its attractiveness.
How Exactly Does it Work?
When businesses provide group term life insurance, the coverage level is usually based on a multiple of the employee’s yearly pay. While this amount can vary greatly, a common practice is to multiply an employee’s salary by two. For example, an employee earning $50,000 per year could receive $100,000 in life insurance coverage. Some employers may offer additional life insurance options for an extra cost if employees wish to obtain a more extensive coverage plan.
If an employee with life insurance passes away, after notifying the insurance provider and providing a copy of the death certificate, the beneficiaries must complete a claims form. After the insurance company reviews the death certificate and claims form, the beneficiaries will then receive their lump-sum payment. In most cases, this payment is tax free.
The Benefits of Adding Group Term Life Insurance
Group term life insurance adds tremendous value to employees, and also provides some advantages to you as an employer. Here are some of the core benefits:
Financial Security That’s Affordable
Employees gain peace of mind when they know that their families are secure in the case of an untimely death. Instead of having to scramble to finance expensive costs that often follow the passing of a loved one, beneficiaries will be assisted so they can focus on the grieving process. Additionally, at little to cost for employees, they
likely won’t have to worry about another monthly expense.
Competitive Edge When Hiring
Pairing group term life insurance with benefits like health coverage and retirement plans helps your company to stand out during the hiring process. While competitive pay is usually the number one priority of individuals searching for employment, offering benefits that extend into the future is a great way to distinguish yourself in a competitive market.
Tax Advantage
In most cases employers are able to deduct the cost of the group life insurance plan as a business expense. Additionally, if a death occurs, the beneficiary payout is also usually tax-free.
Easy to Set Up
These policies are usually very easy to set up and don’t require medical exams. You simply select your plan, encourage employees to sign up through an administrative portal, and that’s it!
Group Term Life VS. Group Permanent Life
As discussed, group term life insurance policies offer temporary coverage for the tenure of an employee’s stay at a company. On the other hand, group permanent life insurance offers employees lifelong coverage, and builds cash value over time.
While a permanent life insurance policy may be suitable for individuals looking for long-term financial planning, these policies generally cost much more for both employers and employees.
In contrast, group term life plans don’t accumulate more money over time. The upside is that they come at a much more affordable rate, standing as an ideal option for employers wanting to provide basic financial coverage to their team, without breaking the bank.
Secure Your Team’s Future with GHQ!
Offering group term life insurance is a simple yet effective way to show your employees how much you care for them and their loved ones. Not only does this affordable benefit offer employees peace of mind, giving them an essential tool to plan for their future, it also gives your business a competitive edge when it comes to finding new talent.
If you’re ready to take the next steps, Group-Health-Quotes (GHQ) is here to help! We offer plan comparison tools, free quotes, and expert advice from licensed agents.
To get started and strengthen your workforce today, contact Group-Health-Quote.com by filling out a form on the right hand side, or giving us a call at (888)-571-0291.
