Group Life Insurance

As a business owner, you need to have the best interests of your employees in mind when creating a comprehensive benefits package. Group life insurance plans are just one component of the package that can offer your employees so much at just a small cost to you.

Your role as an employer is to research a variety of insurance carriers to find the one with the best plans for your employee’s needs. Some of the more prominent companies include CIGNA, Aetna, and Minnesota Life Insurance.

Group Life Insurance For the Employee

The following overview is compiled from information about Minnesota Life Insurance’s group life plans. Generally, group term life insurance is similar from one company to the next, with:

• Guaranteed coverage amounts – either a fixed amount or based on salary
• Basic coverage requires no health questionnaire or medical exam
• Beyond the basic coverage, health questions and medical exam will be necessary
• Rates are based on the group of employees, not per individual
• Less paperwork is involved because insurance is designed for groups
• Payment is made through electronic transfer or payroll deduction
• Coverage can often be converted to an individual policy when employee leaves the company

Group life insurance policies provide the traditional offerings of term and permanent coverage, with most companies providing a basic level at no cost to the employee. Employees have the option of purchasing supplemental insurance in addition to the basic policy at their own cost. Additionally, any changes in family status (marriage, divorce, birth, adoption, etc.) provide an opportunity to update your policy. Note that increases in coverage often require evidence of insurability (including health questionnaire and medical exam).

Other types of policies include:

• Group Universal Life Insurance – provides coverage and builds cash value
• Variable Group Universal Life Insurance – provides flexible investment options

Group Life Insurance For the Employer

From your perspective as an employer, you can offer group life insurance to your employees at a minimal cost to you.

While both term and permanent life insurance policies are available, most employers choose to offer term policies that provide coverage for employees for the duration that they work for the company.

Cost of Group Life Insurance

Since there are no medical exams required for basic coverage, there is only a determination of risk based on age, sex and salaries of your employees. Risk factors are averaged to calculate the premium.