Term Life Insurance Articles
Life Insurance and Employer Benefits
2010-05-31
When it comes to salary and benefits, there is always a trade-off: the more costly the benefits, the less money for payroll. Still, many employers know that a competitive benefits package is essential in today's market. Salary alone will not attract and keep the best employees. Thus, employers often offer an array of benefits, including employer life insurance.
Employer life insurance works like any other life insurance policy. As long as premiums have been paid and kept current, upon the death of an employee, the employee's beneficiaries will receive a pre-determined amount of money. This money is often needed to defray final medical and funeral costs, or is used by a family to meet routine living expenses in the absence of the deceased employee's income. Payment will generally be made to the beneficiaries regardless of the cause of death, except if suicide or foul-play is suspected.
Some employees, especially younger ones, may doubt the need for employer life insurance or see the benefit of such a life insurance policy to their lives. This may be a little short-sighted. One of the reasons that an employer can offer life insurance to its employees is that the employer is purchasing a group policy. This will be noticeably less expensive per person than if each employee bought an individual life insurance policy. Moreover, because employer life insurance comes under a group policy, many of the factors that can raise insurance rates for individuals, such as personal and family medical histories and lifestyle issues, will not be considered when employees are enrolled.
Limitations to employer life insurance do exist, however. The life insurance coverage will only be in effect while a person is employed. Like any benefit, if you leave the job, you lose the coverage. Also, the benefit amount if an employee dies is determined by the employer. Many times, this is an amount equivalent to one or one-and-a-half year's salary. Generally, if employees want more life insurance than is offered by their employer, they will have to purchase the additional amounts on an individual basis. Sometimes, employers will allow their employees to purchase additional life insurance amounts under the group policy. Your human resources department will know if this is possible as part of your employer life insurance plan.
Most financial professionals will tell you that employer life insurance is an important part of any financial portfolio, but it is only one piece. Additional life insurance will almost always be needed to protect a family from the effects of losing a wage-earner's income. Because an employee's life circumstances can change at any time, it is advisable for all employees to take advantage of employer life insurance, when available.
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When it comes to salary and benefits, there is always a trade-off: the more costly the benefits, the less money for payroll. Still, many employers know that a competitive benefits package is essential in today's market. Salary alone will not attract and keep the best employees. Thus, employers often offer an array of benefits, including employer life insurance.
Employer life insurance works like any other life insurance policy. As long as premiums have been paid and kept current, upon the death of an employee, the employee's beneficiaries will receive a pre-determined amount of money. This money is often needed to defray final medical and funeral costs, or is used by a family to meet routine living expenses in the absence of the deceased employee's income. Payment will generally be made to the beneficiaries regardless of the cause of death, except if suicide or foul-play is suspected.
Some employees, especially younger ones, may doubt the need for employer life insurance or see the benefit of such a life insurance policy to their lives. This may be a little short-sighted. One of the reasons that an employer can offer life insurance to its employees is that the employer is purchasing a group policy. This will be noticeably less expensive per person than if each employee bought an individual life insurance policy. Moreover, because employer life insurance comes under a group policy, many of the factors that can raise insurance rates for individuals, such as personal and family medical histories and lifestyle issues, will not be considered when employees are enrolled.
Limitations to employer life insurance do exist, however. The life insurance coverage will only be in effect while a person is employed. Like any benefit, if you leave the job, you lose the coverage. Also, the benefit amount if an employee dies is determined by the employer. Many times, this is an amount equivalent to one or one-and-a-half year's salary. Generally, if employees want more life insurance than is offered by their employer, they will have to purchase the additional amounts on an individual basis. Sometimes, employers will allow their employees to purchase additional life insurance amounts under the group policy. Your human resources department will know if this is possible as part of your employer life insurance plan.
Most financial professionals will tell you that employer life insurance is an important part of any financial portfolio, but it is only one piece. Additional life insurance will almost always be needed to protect a family from the effects of losing a wage-earner's income. Because an employee's life circumstances can change at any time, it is advisable for all employees to take advantage of employer life insurance, when available.
