Finding the Right Group Term Life Insurance
By providing benefits for employees, whether health or life insurance, you give them security against terrible accidents and events. You also protect your own business. Numerous studies have shown that companies with better benefit packages attract more talent and are able to retain that talent. From that perspective, group term life insurance is a cost you can likely make up with better productivity. And with online comparisons of dozens of quotes, you'll save money on your group plan from the beginning.
Getting to Know Group Term Life Insurance
Whether you're an employer or the head of the labor union, when you enact a group life insurance plan, you'll be the policyholder for a group of people. Usually you will pay the premium as well, which will be a lump sum payment for the entire group. If you choose group term life insurance, the policy will typically run for a year. You will normally have the option to renew each year, although it's possible that your insurer may decide against this. Rates might change year to year.
There are three types of group term life insurance policies:
- Basic: Most employers choose this option, in which they pay the premium, employees receive straightforward coverage, and the premium is regarded as a tax-free benefit for the employees.
- Supplemental: Through this option, employers give employees the opportunity to purchase coverage in addition to the basic coverage. The amount can differ from person to person, and the employee will pay the premium.
- Portable: If an employee retires or leaves the company, they can take this kind of policy with them by paying premiums directly to the insurer-though usually not past age 70.
Amount of Coverage
Group term life insurance isn't designed to replace years of income. It's really more of an emergency fund, which the beneficiaries receive only if the insured dies within the term. There is no cash buildup in the policy. Often these benefits cover things like funeral costs, medical bills, etc. How much coverage you purchase for each employee is up to you. A typical amount is $50,000 because any amount over that includes a taxable fringe benefit, though you may decide to provide enough for funeral costs and a year of salary.
The Costs of Group Term Life Insurance
You won't know exactly how much you have to spend until you begin comparing quotes. There are too many variables, such as the number of employees and amount of coverage. You may also encounter additional costs due to higher average age of your employees, or a staff comprised mostly of women. However, there are so many insurers available online that you can find competitive quotes. If you let NetQuote.com manage your search, you can quickly compare offers for no cost. Then you can create a great benefits package for a modest cost.