Employers can offer life insurance to employees and their families as a benefit. This helps attract good employees. Some people cannot get reasonably priced life insurance in other ways, so it can be a valuable enticement. Employers can also deduct the premiums they pay for the first $50,000 of group coverage.
There are a few reasons for an employer offering life insurance to their employees. One good benefits help attract and retain good employees. Employee training is one of the most expensive tasks employers must do, so turnover is costly. Group life insurance benefits are among the most affordable benefits on the market.
One of the best reasons I know is according to LIMRA 70% of hard working Americans admit if they died today, their family would be in financial trouble because of being uninsured or underinsured. It is just good business.
Employers providing some life insurance for their employees goes back well over a century when working conditions were often more hazardous and the workforce was overwhelmingly male. The death of an employee who was often the sole bread winner for his family would leave the spouse and/or children saddled with funeral expenses and a loss of income. Such situations were often viewed as harming the morale of other employees and reducing productivity as co-workers would often be taking time to raise money to assist the family of their late co-worker. It was also not uncommon for the family of the deceased employee to turn to the former employer requesting financial assistance which obviously put the employer in an uncomfortable situation. Term life insurance was an inexpensive way for the employer to address this employee need while enhancing employee loyalty and morale and avoiding workplace disruption.
Since then the provision of employee life insurance became institutionalized as employee benefit plans became the norm. In fact, for many years it was not uncommon industry practice for the group's health insurance carrier to require the bundled sale of some term life insurance when they implemented coverage for an employer group (a practice that has since been discontinued).
As such, employer's providing life insurance for their employees has been a mix of employer's looking out for their employees and their families, protecting their own self-interests, tradition and industry practices. Term life insurance still remains one of the least expensive benefits an employer can provide to their employees that often has the most emotional impact when it is actually needed.
Co-Founder, TermInsuranceBrokers.com, Goldenzweig Financial Group, Las Vegas, Nevada
Employers offer extra benefits above salary as a way to attract people to come work for their company. In the case of life insurance, the employer will pay for a portion (or all) of the cost for the insurance. Some employers will provide up to $50,000 of life insurance coverage, others may base it on your income level (e.g. 1x income, 1.5x income, 2x income, etc.).
It's important to note that with group life insurance, if you leave the company or are terminated, you lose the coverage. This is why it's good to also supplement the group coverage with an individual life insurance policy. Individual policies go with you regardless of where you work.
I hope the information is helpful - please feel free to contact me for help and if you have any other questions. Thanks very much.
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One of the best reasons I know is according to LIMRA 70% of hard working Americans admit if they died today, their family would be in financial trouble because of being uninsured or underinsured. It is just good business.
Since then the provision of employee life insurance became institutionalized as employee benefit plans became the norm. In fact, for many years it was not uncommon industry practice for the group's health insurance carrier to require the bundled sale of some term life insurance when they implemented coverage for an employer group (a practice that has since been discontinued).
As such, employer's providing life insurance for their employees has been a mix of employer's looking out for their employees and their families, protecting their own self-interests, tradition and industry practices. Term life insurance still remains one of the least expensive benefits an employer can provide to their employees that often has the most emotional impact when it is actually needed.
It's important to note that with group life insurance, if you leave the company or are terminated, you lose the coverage. This is why it's good to also supplement the group coverage with an individual life insurance policy. Individual policies go with you regardless of where you work.
I hope the information is helpful - please feel free to contact me for help and if you have any other questions. Thanks very much.