Group Life Insurance Plans
Choose a basic or supplemental life insurance plan to give employees peace of mind.
Group life insurance is another common employee benefit your business may want to consider. Through these plans, employers purchase a single contract that extends life insurance coverage to group members who elect the benefits. If an employee dies while enrolled in the plan, the policy guarantees a predetermined payout to designated beneficiaries. In some instances, business owners may even be able to offer basic life insurance coverage at no cost to employees.
Surveys and studies have shown that many Americans overestimate the cost of life insurance. In reality, premiums through employer-sponsored life insurance plans are often extremely low, making them an attractive benefit that can easily be deducted from paychecks.
As an employer, you have two main options when it comes to providing group life insurance coverage for your employees—basic and supplemental. Depending on your needs, one might be preferable. Some employers may choose to provide both basic and supplemental life insurance to their employees. Here’s what you should know:
Basic life insurance – For employees, basic life insurance often comes at no extra cost to the employee. Typically, this kind of insurance allows employees to gain coverage without having to cover monthly premiums.
Supplemental life insurance – Supplemental life insurance, also known as voluntary or contributory life insurance, is additional coverage that can be purchased by employees through their employer. As a result, employees pay monthly premiums for this additional coverage, which is usually automatically deducted from their paychecks.
Nixon & Lindstrom works closely with top life insurance carriers like Delta Dental, MetLife and Mutual of Omaha to help businesses large and small throughout Springfield and Southwest Missouri find practical, affordable group plans. Request a quote today for more details on group life insurance plan options and pricing.
When it comes to group life insurance, the biggest selling point is value. Group life insurance plans also guarantee coverage for all members. While you may be required to complete a questionnaire, you won’t have to undergo a medical exam to qualify for coverage. In addition to affordability, company-sponsored group life insurance plans are incredibly convenient. Each year during the enrollment period, employees can either decline or elect coverage and designate their beneficiaries if they opt in. Through some group life insurance plans, employees may even purchase additional voluntary coverage at no cost to their employer.
Group life plans, however, aren’t without their drawbacks. Business owners control the policies and may only decide to offer basic coverage, which may not be enough to provide for your surviving family members. Additionally, if you change jobs, your group life insurance won’t likely transfer to your new employer. If you want to keep your coverage, you’ll have to take out an individual policy and pay higher premiums for the benefits. These drawbacks aren’t necessarily deal breakers, but they’re worth noting for employees contemplating group life insurance coverage.
More and more employers are offering life insurance as a part of their employee benefits package. According to the U.S. Bureau of Labor Statistics, 60% of American workers had access to employer-sponsored group life insurance in 2020, and 98% of them participated in those plans. Given its popularity, group life insurance is definitely worth investigating.
The amount of life insurance coverage you offer employees is totally up to you. Some business owners opt for a flat-dollar benefit across the board while others offer policies that allow employees to increase their coverage in increments of their salary. There’s also supplemental group life insurance, which gives group members willing to pay higher premiums even more latitude to up their coverage. The cost of a group life insurance plan depends on specific benefits as well as company size, industry and employee demographics. Whether you’re a small or large business, Nixon & Lindstrom can help you explore your options and select the best life insurance plan for your business.