Employees are faced with many complexities when working at retaining true hard-working, high-caliber employees. One of the best ways to keep employee turn over to a minimum is to offer good benefits. Sometimes this may be difficult as attaining the very best benefits may be costly. A consideration in solving this problem is in adding group life insurance to the employer’s current benefit plan. This can be a cost-effective solution. Group life insurance is a good supplement to an existing individual life insurance policy.

Normally, group life insurance is not offered to smaller companies with less than fifteen employees. The person to contact in regard to group life insurance plans is an independent broker. He/she is useful in assisting companies with 1,000 employees or less. The broker is able to provide a list of prices from several different providers. It is typical for a company to purchase all of their group products through one broker. The advantage of purchasing all insurance coverage in one place is that the employer is able to pay a set amount per one thousand dollars worth of the supplemental group life insurance.

The following example will assist in illustrating the above statement:

Any employer pays 50 cents for every $1,000 of a $50,000 death benefit. Therefore, the employer pays $25.00 monthly for one employee. The math is as follows: 50 x .50 is equivalent to 25.00. (The figures and example are not real and are for illustration purposes only.)

Small policies can be made available on a guaranteed issue basis. This means there is no medical exam required for any of the employees that are insured. When an employer offers his/her employees group life insurance, it is very important that the employer makes his/her employees aware that group life insurance is not intended to replace individual insurance policies. Group plans are supplemental policies and typically provide coverage from $10,000 to one year of salary of the insured’s policy. A year’s salary is not sufficient in supporting the employee’s survivors or dependents on occasion of the employee’s death.

Price of a group insurance package is another consideration. This is based on the number of employees, employee’s gender, age and the type of business the company operates. The more risks involved in the employee’s job function, the more the employer will pay for the insurance. In addition, a group rate is not affected overall if an employee is diagnosed with a serious medical illness and continues working. Once the group policy has been put in force, an employee remains covered under the insurance should he/she need to take an extended time off. However, should the employee be on disability or has taken a leave of absence prior to the issuance of the group plan, the employee will not be covered under the policy until they have re-entered the workforce.

It is important for the employer to regularly re-evaluate his/her group plan as the company’s needs and objectives change. This is in order to obtain the best possible pricing. The best rates are available to larger organizations. This is because the larger organizations can collect significantly more in premiums. Smaller companies are not able to collect as much as the larger corporations. Also, this tiered-structuring remains with larger organizations because they are better able to afford group plans.

The best time for an employer to make a re-assessment of a company’s group plan is when there is a significant increase in the company’s growth. Other factors involved in this re-evaluation may include: the company hires executive officers with measurably higher salaries; the basic characteristics of the company’s workforce changes; or there is an improvement in the company’s current benefits. The above-mentioned factors are important considerations as a business continues to grow as the employer may be eligible for a lower rate for his/her life insurance group plan. Therefore, it is probably a good idea for a growing company to check back with their broker on a regular basis.

Should an employer need to make a change or procure a new or different plan, there are several options. The most basic of life plans will cover one year’s worth of an individual’s salary. The group universal life plan can offer up to three times an employee’s annual salary.

In addition, the employee may remain covered under the group universal life plan after leaving the company’s employ or when he/she retires. A nice feature of the group universal life plan is that it can build cash reserves towards future premiums. The drawback of the plan is that it is only offered to companies with over one-thousand employees.

The class of employee may also be a consideration when implementing separate group life plans. For example, an employer may wish to provide one death benefit payout for some workers within his/her organization and offer a different type of death benefit for individuals holding higher positions such as managers and supervisors. The company may wish to provide the managerial staff with a death benefit payout two times higher than the supervising employee’s salary.

The employee’s spouse and children may be covered in some supplemental group life insurance plans. A plan of this nature offering coverage for the employee’s dependents may offer a pre-determined payout to the employee’s spouse and an established payout to each child. Should a company offer expanded insurance the expense may be passed on to the employee. It is prudent for the employer to know that it is advantageous for the company to offer its employees benefits only up to a certain point. When the employee wants to add more to the benefit, then the employee may need to incur the additional expense.

In addition, when a company evaluates group life plans, it is necessary for the company to research insurance providers that offer the features the employer is interested in providing to its employees.

It is also important when shopping for an insurance provider to look for certain characteristics. The insurance provider must offer solid financial strength. This is a good indication that the provider will honor its claims. Also, consideration is needed as far as the insurance provider’s area of expertise. Should the employer have a smaller employee population, then an insurer that works with large organizations is probably not the best match for the employer. Also, it is important for the employer to work with an insurance provider who works with companies the same size as the employer’s organization so the best possible rates and premiums may be acquired. Lastly, the employer needs to look for a provider who offers features as it regards group life insurance that the employer would like to purchase and offer his/her employees.

By following the above-mentioned guidelines, an employer may be able to obtain the best possible supplemental benefits for his/her employees at the lowest possible rates. 

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