In Summary
Protecting employees with a group life insurance policy is one of the most important benefits that a firm can provide. It can provide peace of mind for employees and help with long term retention. It’s important to note that while group life offers some coverage, it may not be enough for an employee’s entire needs. In either case, it’s worth speaking with an experienced life insurance advisor to find out what’s best for your company’s and employees’ needs.
Group life insurance is coverage that’s purchased for employees of your company.
In most cases, the employer pays the group life insurance plan’s premiums. Group life insurance assists a business in retaining employees by being an invaluable part of an employee benefits package.
With group life specifically, if an employee passes away while they work at your company, their dependents receive a lump sum of money to help pay for their expenses. The other important aspect of a group insurance policy is affordability. It is more affordable to purchase life insurance coverage for a group (in bulk) compared to buying an individual life insurance policy.
One important thing to consider is that group life insurance plans are valid for only as long as an employee is part of your company.
Let’s dive into more details about group life insurance and whether it’s right for your business.
What is group insurance?
Group insurance covers a group of people, usually your employees. It is essentially life insurance coverage that is purchased in bulk, resulting in cost savings. Group life insurance is also a common benefit offered by employers to their employees as part of their employee benefits plan.
Types of group insurance plans
There are several sorts of group insurance plans. These plans include those that provide uniform coverage to all members. In some cases, the amount of coverage offered can differ based on the salary or job position of an employee. Some insurance plans additionally allow riders to buy accident benefits, critical illness coverage, and disability coverage.
Usually, all employees are eligible to take part in a group insurance plan.
Benefits of buying group life insurance
There are many different benefits to group plans.
- Payment of the premium – In most cases, the employer pays the group life insurance plan’s premium (it’s essentially a free benefit for employees)
- Experienced fund managers – The funds accumulated under the group life insurance policy are in the hands of skilled investment managers. Fund managers assist employers in the management of superannuation, gratuity, and other distributions.
Having this as an added benefit means that as an employee, you may earn additional coverage benefits if you have worked for an organisation for years.
Some companies offer to buy additional individual Equitable Life term life insurance plans outside of a group policy plan. Individual life insurance purchased outside of the group plan can stay with any individual employee even if they are fired or change jobs. It can also often be purchased for cheaper rates than if an individual purchased from a life insurance company themselves.
Disadvantages of the group life insurance
While there are many benefits to group insurance, there are also some disadvantages.
Some businesses issue group life insurance policies that cover their employees. It excludes the spouse and children. In this case, employees will need to re-evaluate the coverage and change it to a separate insurance policy that protects their dependent family members.
Group life insurance plans are valid for as long as an employee is with your organisation. When they resign or leave the organisation, the insurance coverage ceases. Some public sector organisations continue to provide coverage even after an employee has left the organisation.
