Group Life Insurance
Keeps your employees and their dependents safe from financial disaster with life insurance. Get a quote for group coverage today.
No matter how young or healthy a person may be, the reality is that death or dismemberment can happen to anyone at any time. When it does, this catastrophe leaves children and other family members in a very financially difficult situation. Life insurance was created to help loved ones cover the expenses and debts that often come to pass after the severe injury or death of a family member.
How Life Insurance Works
In exchange for premiums paid by an individual or an employer, the insurer provides a lump sum when the insured person dies. This is known as a death benefit. In more specialized cases, benefits can be paid out if a covered person is severely injured or dismembered. Although individuals often purchase life insurance, it is also offered by employers, including small businesses, and can be considered to be an important component of many benefits packages. With group life, you as the employer are the policyholder, and your workers are the entities to be covered. There are three main types of group life insurance. The one you choose will depend on your priorities and needs as a business owner. We will look at each in detail.
Group Term Life Insurance
This policy is usually provided on an annual basis. Each year, the employer and the insurance company can review the terms and decide if they would like to renew it. Rates are subject to change each year at the time of renewal. In the majority of cases, you as the employer cover the costs of everyone’s policies at the rate of one to two times an employee’s yearly salary. If a worker wants additional coverage, it can usually be purchased at his or her expense and can be deducted from his or her paycheck.
There are three kinds of group term life coverage:
- Basic group term life. The employer usually pays the cost for this. Premiums are considered to be a tax-free employee benefit.
- Supplemental group term life. Often provided in addition to a basic group term plan, this enables an employee to purchase additional coverage at his or her expense.
- Portable term life. This benefit is for employees no longer protected under the employer’s group term policy due to leaving the group or retiring. People pay the insurer directly for this coverage, which can last until the insured reaches age 70.
Group Universal Life Insurance
Combining the advantages of term and whole life insurance, group universal life is affordable and offers portability and simplified policy underwriting as well as the chance to accumulate cash. As an employer, you can choose to pay the premium only, or you can make additional payments that accumulate cash over time. Coverage for dependents can usually be added on as a rider, and coverage can be extended to age 100.
Variable Group Universal Life Insurance
This type of policy is often chosen if you want to fund life insurance for retirees or executives of your company. Because of the power of buying for the group, premiums are affordable. There is often a tax-deferred investment option, optional dependent coverage, the ability to extend coverage until age 99 and the ability to have different types of investment accounts. However, it should be noted that numerous expenses and fees accompany variable group universal life, including management and distribution fees, fund costs and mortality and expense charges.
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