Group Life Insurance: The Hottest Voluntary Benefit on The Market – Zupnick Associates

(By: Brittany Brooks

Since the pandemic began last year, people have been searching for life insurance plans more than usual. In fact, Google Search traffic for “life insurance” increased by 50% since March of 2020.

Employees, young and old, were looking to enroll in life insurance plans. The Board of Labor Statistics found that 98% of employees specifically enrolled in group life insurance making it the hottest voluntary benefit on the market.

Between the financial and medical uncertainty of the pandemic, it’s no surprise why so many employees were eager to enroll. Wondering if group life insurance is the right voluntary benefit for your company?

Down below you’ll find:

  • What Is Group Life Insurance?
  • Types Of Life Insurance
  • The Benefits of Group Life Insurance
  • Why Group Life Insurance Is the Hottest Voluntary Benefit

 

What is Group Life Insurance?

Group life insurance is a voluntary benefit offered by the employer. It’s a single contract that covers an entire group of employees. As an employer, you can acquire a group life insurance policy through your insurance broker.

The insurance broker is able to sell the policy on a wholesale basis. Granting significantly lower rates to your company.

Coverage is usually between $10,000-$50,000 or one to two times the employee’s annual salary. Best to offer this group benefit as a perk rather than a benefit. You can also offer more coverage or a separate life insurance policy to supplement the group life insurance plan.

Your insurance broker can still offer added coverage at the discounted group rate. 

 

2 Main Types of Group Life Insurance

  • Term Life Insurance

Guarantees payment for the covered employee within a particular term or specified amount of time. Once expired, the policyholder can renew it for another term or convert it to a more permanent form of group life insurance.

 

  • Whole Life Insurance

Also known as permanent life insurance. This type of coverage can last the duration of the covered employee’s lifespan, hence the name permanent life insurance. Employees can accumulate a cash value on this type of policy.

The cash value accrual can be withdrawn or requested as a loan. Whole life insurance plans tend to offer 10-15 times more coverage as opposed to term life insurance and won’t expire after a specified time.

The Benefits of Group Life Insurance

Group benefits improve retention and make your company more competitive in the job market. Employees appreciate having a safety net for their children and family. Group life insurance is an appealing voluntary benefit because it gives your employees a peace of mind.

Both you and your employees benefit from group life insurance plans. Since you’re buying the policy wholesale through an insurance broker, you get access to low premium rates.

These savings are directly passed to eligible individuals within the company. In most cases, you can offer group life insurance plans for free or at little cost to employees.

Compared to individual life insurance, group life insurance is easier for employees to enroll. They can avoid the tedious underwriting process. Employees automatically enroll in the plan when they are eligible.

Underwriting Process: A process insurance companies use to calculate the potential risk to cover an individual. Usually involves a health examination for eligibility.

Group benefits are less risky for insurance companies to insure. The risk is based on the entire group or company rather than the individual. This gives your insurance broker the capability to give your company discounted premium rates. 

Why Group Life Insurance Is the Hottest Voluntary Benefit

There’s a valuable reason why group life insurance is one of the most searched group benefits. Employees are expecting something extra from their employers.

As an employer, you can offer group life insurance as a voluntary benefit to increase your employee’s financial security. The low cost of group benefits tends to make the participation rate increase. The participation rate is higher not because of the discount alone, but the ease of enrolling.  

In the event of the employee’s passing, their family can:

  • Still plan for their child’s educational future
  • Take care of daily living expenses
  • Pay off debts, bills, taxes, or funeral costs
  • Use the funds for the spouse’s or significant other’s abrupt loss of income

 

Something To Keep In Mind:

When you’re looking for group life insurance or thinking about offering it as a group benefit, there are a few things to keep in mind. It does not cover everything. These plans are cheaper and they only range from $10,000-$50,000 on their own.

Offer this voluntary benefit with the option to purchase more coverage if the employee chooses too. Your insurance broker will sell extra coverage at the group rate, so your employees can take advantage of this opportunity.

Providing group life insurance to your employees is essential to your benefits package. It costs you very little to give your employees some added financial security. The pandemic made people think about the “what if” and a few of them realized they weren’t prepared.

Take this as an opportunity to be there for your employees and improve your retention.

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