Group Life Insurance Plans

Life Insurance — Life Insurance Plans, Coverage & Quotes

Your employees are your company’s most valued asset. Therefore, it is recommended that you have some form of group life insurance. The good news is that group life insurance is more affordable, since policies are bought in bulk and the insurer’s risk is spread among your workforce. Life insurance is closely intertwined with group health insurance. In many cases, both are offered and bought simultaneously. Some of the same companies offer life insurance policies to individuals in addition to small business health insurance, so you may want to acquire both at the same time.

Business health insurance and life insurance are both intended to protect against financial ruin under unexpected circumstances. In the case of a life insurance policy, that is the death of an employee. The life insurance payout used for multiple purposes. For example, it can be used to contribute to funeral expenses, compensate the family, provide counseling to co-workers, or help the company work through the difficult process of tying up the deceased employee’s loose ends and various business committments, in addition to hiring and training an eventual replacement. If you have a small business, you know that your workers can become an employer’s second family; this is often the case in larger firms, as well. In the case of big corporations, the life insurance money may also help mitigate possible legal problems.

The average life insurance company offers several varieties of life insurance for groups. Term life insurance is the cheapest type. Why is a term life insurance quote so inexpensive, compared to other types of group life insurance with the same cash value?  When you buy a term life insurance policy, the cash value is only paid out if an employee passes away within the life insurance term. Most life insurance companies sell term life policies for periods between five and 30 years, in five-year increments. In essence, life insurers are betting that your employees will outlive the business life insurance policy in order to keep term life insurance rates low. This means that the life insurance company’s risk is reduced, and they are able to pass on some of the savings to you. Also keep in mind that term life insurance does not serve as a method of savings or earn interest; although you can borrow from a life insurance policy, it must be paid back with interest. Otherwise, that amount is deducted from any future payout. As a result, it isn’t an ideal investment instrument.

Whole life insurance, as opposed to term life insurance, remains in effect for as long as you continue paying the life insurance premiums. There are other benefits to group whole life insurance. Guaranteed cash values accumulate from a portion of your premiums, and will be paid to you periodically; these can be paid out to employees as a bonus or used to further fund the business. The entire guaranteed cash value will also be paid out upon surrender of the policy for any reason, including termination or departure of an employee. The actual amount and number of guaranteed cash values provided varies between whole life insurance products and companies, depending on the age and health of the employees. Small businesses will see the greatest impact of those variations, as there are fewer employees to keep costs down. In addition, this type of life insurance also has the possibility of earning dividends in the case of a life insurance company spending less than they accounted for when calculating the amount you pay in whole life premiums. Moreover, premium payments also remain steady under the majority of whole life insurance plans. This makes whole life insurance appealing to companies whose employees are generally younger and unlikely to pass away during the period a term life insurance plan covers, since their monthly premiums will be lower. Despite these advantages, a whole life insurance quote can be more expensive.

Variable life insurance offers your business the most control over its money. It is similar to whole life because policies are permanent, but is different due to the fact that it allows the policyholder has total say over the investment allocations of the cash value. A variable life insurance company will let an employer invest in any combination of stocks, money market funds, and/or bonds. A variable life insurance policy can turn out to be extremely profitable in the right hands, or have horrific results that send a business into bankruptcy with improper management. However, this increased control makes variable life insurance rates the most costly variety of group life insurance

VitalOne has licensed group insurance agents available to help you select a life insurance policy for your employees that best suits your business.

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