Life Insurance: A Benefit To Attract And Retain Employees

Life insurance is a popular benefit offered by employers to their employees. It is completely optional for employers to provide this benefit, but it is worth considering due to the potential for lower rates when insuring a group. Group life insurance policies are usually inexpensive and easy to administer for employers. They are also beneficial for employees, as they provide a safety net that can help boost peace of mind, reduce stress, and improve focus at work.

Peace of mind for employees

Life insurance is a popular employee benefit, and for good reason. It provides employees with peace of mind, which can boost productivity and reduce stress. Knowing that their loved ones will be financially secure in the event of their death allows employees to focus their energy on their work without worrying about providing for their families. This sense of security and improved focus can lead to higher productivity and better performance.

Financial security for dependents

Life insurance offers employees the assurance that their families or dependents will be taken care of financially if something happens to them. It provides a safety net that can help cover essential living expenses, pay off debts, fund a child's education, or supplement retirement savings. This financial cushion can be invaluable, especially for employees with families or those who are the primary breadwinners.

Affordable coverage

Group life insurance, the most common type of employer-provided life insurance, often comes with lower premiums than individual policies. This is because the risk is spread across a large group, and group policies are usually bundled with health insurance, resulting in minimal sales and administrative costs. Lower premiums make it easier for employees to obtain adequate coverage without breaking the bank.

Easy accessibility

Enrolling in employer-provided life insurance is typically a straightforward process. Employees can opt in without the need for medical underwriting or extensive paperwork. This convenience is especially beneficial for those who are early in their careers or have pre-existing medical conditions that might otherwise make it challenging to obtain coverage.

Additional protection

Employer-provided life insurance can serve as a valuable supplement to any existing private policies an employee may have. It adds an extra layer of protection and can help bridge the gap if their personal coverage is insufficient. This additional coverage can be crucial in ensuring that an employee's loved ones are financially secure.

Overall, employer-provided life insurance plays a vital role in offering peace of mind to employees by addressing their financial security concerns. It helps alleviate the stress associated with providing for dependents and ensures that they can focus on their work with the knowledge that their loved ones will be taken care of.

Affordable and easy to administer

Offering life insurance to employees is a popular option for employers. Group life insurance is often inexpensive and easy to administer.

Group life insurance is usually less expensive than individual policies because the risk is spread across a large group. Group life insurance premiums are considerably lower than those for individual life insurance policies, mainly because group life insurance is less risky for the insurance company. The insurance company bases group life premiums on the overall risk of the company or group, and for most companies, that risk factor is low. Group life insurance is typically bundled with health insurance, so sales and administrative costs are minimal.

Most employers offer group-term life insurance as an employee benefit. Term insurance is only in effect for a certain period, usually for as long as the employee is employed. Group-term life insurance can be offered to employees only, not their spouses and children.

Group life insurance is a convenient and easy way for employees to get some degree of protection for their dependents. Employees can save or use their earnings for other needs since employers usually pay for all or most of the company life insurance premiums. Employees can also save time and effort by opting into group life insurance, as most employee life insurance plans are guaranteed and do not require a medical exam for acceptance.

Group life insurance is also beneficial for employers as it is easy to administer. It does not require constant monitoring and, hopefully, will not generate many claims. The insurance company provides the necessary forms to enrol employees, and employees designate their beneficiaries.

Overall, group life insurance is a cost-effective and straightforward option for employers to provide their employees with financial protection.

Attracts desirable candidates

Life insurance is a desirable benefit for employees, and employers can benefit from offering it. It is a relatively easy and inexpensive way to improve retention, recruiting, and morale.

A good life insurance policy can be very attractive to desirable candidates, especially those with families or children. Life insurance is one of the key benefits that employees look for when job searching, and offering even a basic policy can help set you apart as an employer of choice.

The peace of mind that comes with life insurance can boost security and productivity for employees. The Consumer Financial Protection Bureau has found that when employees have to spend time and energy worrying about providing for their families, they are less productive. A good life insurance program is a key factor in overall financial health and can provide employees with the peace of mind that lets them focus their energy on their daily tasks.

Additionally, life insurance is often inexpensive and easy for employers to administer. Group life insurance premiums are considerably lower than premiums for individual life insurance policies, mainly because the risk is spread across a large group, and the insurance company's overall risk factor is low. Since group life insurance is typically bundled with health insurance, sales and administrative costs are minimal.

Employers can also choose to subsidize the cost of group life insurance, making it a highly affordable choice for employees. The eligibility criteria are minimal, with little to no medical underwriting, ensuring that all employees can avail themselves of this benefit.

However, it is important to note that group life insurance coverage amounts are usually limited to a multiple of the employee's salary, which may not be sufficient for everyone's needs. Additionally, group life insurance is not portable, meaning coverage ends when an employee leaves the company. Conversion to individual policies is possible but can be costly.

In conclusion, offering life insurance can be a powerful tool for attracting desirable candidates, improving retention and morale, and fostering a more productive and secure workforce.

Improves retention and morale

Life insurance is a popular employee benefit for both employers and employees. It is inexpensive and easy for employers to implement, and it can improve retention, recruiting, and morale.

Life insurance is one of the key benefits that employees look for when they are job searching. Offering even a basic policy can help set employers apart and make them more attractive to desirable candidates.

A good life insurance policy can mean a lot to an employee, especially if they have a family or children. It provides financial security and peace of mind, allowing employees to focus their energy on their daily tasks. This can lead to higher productivity and improved morale in the workplace.

Additionally, life insurance can boost retention rates by giving employees another reason to stay with the company. Knowing that their employer cares about their well-being and financial security can increase employee loyalty and reduce turnover.

Overall, offering life insurance as an employee benefit can lead to improved retention, recruiting, and morale. It shows employees that their employer cares about their financial security and well-being, leading to increased loyalty, productivity, and satisfaction in the workplace.

Tax benefits

Offering life insurance to employees can have tax benefits for employers. Firstly, if an employer pays for an employee's life insurance coverage, only the cost of coverage over $50,000 is taxable income for the employee. This means that the employer can cover the first $50,000 of an employee's life insurance without creating a tax burden for them.

Additionally, group term life insurance plans can have further tax advantages if they meet certain requirements. These include providing a general death benefit, being offered to all employees or a group based on age, marital status, or factors related to employment, and being provided under a policy carried directly or indirectly by the employer. If these requirements are met, only the cost of coverage over $50,000 is included in the employee's gross income. Even if the plan is discriminatory, non-key employees can still benefit from this exclusion.

Moreover, group term life insurance benefits provided by employers are deductible as a business expense. This means that employers can reduce their taxable income by the amount they spend on these benefits.

Finally, employers can also benefit from tax advantages when offering whole life insurance plans. These plans provide a death benefit and allow employees to accumulate cash value. The cost of permanent benefits, less the amount paid by the employee, is included in the employee's income. However, if the employer pays for all the permanent benefits, any dividends from the policy are included in the employee's income.

Frequently asked questions