Americans think life insurance is important, but that doesn’t make them any more likely to carry it. A poll found only 59% of Americans have some kind of life insurance, even though 84% of respondents said “most people” need it.
If you run a business, you have the option of offering life insurance to your employees. But it’s more than just a yes or no question.
If you offer it, you’ll have to decide between a basic life insurance plan or more comprehensive packages. Keep reading to answer the question, “How does life insurance work?” when it comes to your employees.
How Does Term Life Insurance Work?
You may have heard the phrase “term life insurance” without quite understanding what it means. It’s pretty simple. Term life insurance is good for a specific term.
In the case of work-sponsored life insurance, the term lasts for as long as the person works there.
There are obvious advantages for your employees if you offer life insurance through the workplace. For starters, it’s easier to get life insurance as part of a group plan.
When your employees go outside of work, they’re going to have to answer more questions. They can also get disqualified based on pre-existing conditions.
There are also advantages for you, the employer. Got at least 10-full time employees? If so, offering life insurance could get you a tax deduction.
There are other benefits which don’t show up on your balance sheet. When you offer life insurance to your employees, you’re showing them you care about them as people. It’s one of many ways you can boost morale in the office.
Life Insurance Options
Basic life insurance is often related to the employee’s salary. For instance, an employee who makes $40,000 a year might get $40,000 of life insurance.
This is going to be your cheapest option. You may even be able to give basic life insurance to employees at no cost to them.
But what if you want to offer more? The best insurance companies can provide you with a range of options for your workers.
There’s something called group accidental death and dismemberment insurance. If your employee loses a limb or dies in an accident, their beneficiary will receive payments.
Do your employees take a lot of business trips? In this case, look into adding accident insurance which covers them for any injuries sustained while traveling for your company.
Don’t forget the life insurance riders a well. An insurance agent can do a better job of explaining available riders for your company.
It’s also important to avoid discrimination when deciding who can buy life insurance. It’s probably fine to offer life insurance to employees who have worked there six months or more, for instance.
But if you only offer insurance to a handful of high-level executives, you can forget about deducting those premiums on your business taxes.
Beyond Basic Life Insurance
In most cases, basic life insurance is a perk worth offering at your business. It’s relatively cheap for you, but it can mean a lot to the people you employ.
If you really want to invest in your employee’s well-being, you can look into installing wellness programs at work. Read our blog post on this topic to learn how such programs can increase productivity.