Group Life Insurance Coverage for Businesses
Group life insurance, also called umbrella life insurance, is a kind of life insurance where a single policy covers an entire group of individuals. In most cases, the coverage owner is either an entity like a labor union, or an employer, and the coverage basically covers only the paid members or employees of that group. This can be a great benefit for employees who might not otherwise have the financial means to maintain a group coverage on their own. Often, this coverage will cover the entire staff of an organization.
There are many situations where it might make sense for an employer to offer group life insurance to their full-time employees. Maybe the employer wants to attract younger people into the company, or perhaps it’s just more cost effective to give these people coverage than would be the case if they worked individually. Many of these policies also offer accelerated death benefits, which allow the beneficiary to receive the death benefits immediately, rather than waiting until the employee passes away as the case might be. The policy might also provide some coverage for funeral expenses and legal costs. It is important for an employer to check with the local laws regarding these issues and find out what kinds of options are available to them.
Another common situation in which group life insurance may be a smart move for an employer is when an employee has a specific illness or condition. For instance, if an employee is dealing with breast cancer, then he or she will likely want to have coverage for it in the event that he or she dies. In order to do so, he or she must remain covered under a single contract with the insurer. These contracts often have features that help to make sure that the insured person can get the care that he or she needs while in the hospital.
Sometimes, however, an employer-provided life insurance policy simply isn’t enough. For instance, if the employee is married, his or her spouse can decide to take out a separate group life insurance policy, rather than the one that the employer is offering. This way, the two spouses can get the benefits package that they need, without having to worry about competing interests. It can also help to keep the cost down for the employee and the spouse, since one person will not be paying the premiums, while the other is contributing. By keeping premiums lower for the employee and the spouse as well as the children of the insured, the employer will also be able to save money on his or her life insurance policy.
Usually, when an employee is making his or her own decisions about his or her own coverage, he or she is encouraged to select a group life insurance policy with the same company. The reason for this is that it makes sense for that insurer to offer him or her the same benefits. After all, that insurer has already done all of the work in terms of finding a group that will pay the premiums. Therefore, it does make sense for that insurer to offer the employee the same benefits. However, if the individual decides to go with another company, there are a number of different options that he or she has to choose from.
One of the most common ways to provide employees with group life insurance is to offer them either a “level premium” or a “group rate” plan. With these plans, an entire group of employees will typically pay the same premium, irrespective of whether they are part of an entire group or not. However, these are typically only available to those who work within a defined set of demographic. Group rates are typically more expensive than level premium plans, but they do allow employees to have more control over the overall cost of their coverage.
Many employers who provide group life insurance also allow their employees to purchase additional benefits packages. Typically, these packages include disability income protection, accident and dismemberment benefits, long term care, and certain opportunities for future economic advancements. In addition to providing their employees with these benefits, many companies also provide their employees with the opportunity to take out what are known as “cash value” policies. These cash value policies give employees the option to convert the life insurance policy into one that has a fixed premium and gradually raise the amount of money that is paid out each year.
There are also a number of group life insurance policies that are provided to an entire staff as a means of providing coverage for the entire staff. These types of policies typically have very low premiums and do not require the same level of benefits that are available to an individual employee. However, these are typically only available to full time staff members and may not be able to provide the same benefits as other employees of the company. They generally last until the employee begins his or her first fulltime employment term.