For many income earners, life insurance helps ensure that loved ones will be financially provided for if the breadwinner passes away. This is an important protection for any Massachusetts family that’s dependent upon an income. Thus, providing coverage through group life insurance can be a valuable benefit to employees.
Group life insurance provides coverage for a defined collection of people. It can ensure employees or other groups, rather than just individuals as personal life insurance does.
Many Massachusetts employers might want to provide group life coverage as an employee benefit. This is a simple (and usually inexpensive) way to improve employees’ compensation packages. Governments may likewise provide group life coverage as a benefit. In certain fields, providing benefits such as this is instrumental for attracting top talent.
In some cases, organizations offer group life coverage for their members. It can be a perk for members of unions, professional organizations, clubs or other nonprofits.
Group life coverage is available in almost any amount. Some policies provide five- and six-figure sums of coverage for each employee, while others are in the low four figures.
Some businesses sign up for policies that provide coverage worth several times employees’ salaries. So much coverage can greatly reduce employees’ need to purchase life coverage on their own.
Other businesses get as little as $1,000 or $10,000 worth of coverage. While this doesn't seem like much, $10,000 is usually enough to cover funeral costs that could be a burden to lower-wage workers. Even $1,000 can help with unanticipated expenses.
There’s no right amount to offer, and businesses should choose an amount based on their finances and what’s most appropriate for their employees’ compensation packages. An insurance agent who specializes in group life coverage can help businesses decide how much coverage to offer.
Group life policies’ premiums can be paid by the employer that offers the coverage, or the employee who benefits from the coverage. Many businesses have the two parties share the costs in some way.
When businesses pay the entire premiums themselves, the coverage is normally offered as a standard benefit that all employees are automatically enrolled in. When employees pay any portion of the premiums, the coverage is often a voluntary benefit that employees can choose.
Of course, employees should be made aware of the benefit regardless of whether it’s standard or optional. Employees need to know they have the choice available if it’s optional. They should know the coverage is available if it’s standard.
The majority of whole life policies that employers purchase are term policies. They provide coverage for a defined amount of time, usually the employees’ time with the employer. These policies typically have a fixed premium, and only provide death benefits (payment if someone passes away).
Employers seldom provide whole group life policies. Whole life policies combine death benefits and a savings vehicle, but a matched 401(k) is normally a better savings option for employers to offer. The policies usually are designed to last for a policyholder's lifetime, which creates challenges after an employee leaves their job. The policies also have varying premiums, which makes budgeting for future costs much more uncertain.
If your Massachusetts business would like to offer group life insurance as an employee benefit, contact the independent insurance agents at Garrity Insurance. Our agents can get you set up with an affordable yet meaningful policy, and also assist with any other insurance benefits you might want to offer employees. We, naturally, can help organizations and nonprofits too.