Group life insurance shows employees you value what matters most to them - their loved ones, and it is an integral part of most employee benefits packages. When provided by an employer, employees appreciate the value of life coverage and the additional security it provides to their families.
Life insurance can help employees protect their loved ones.
Did you know more than 35% of all households would feel a negative financial impact within 1 month after the death of the primary wage earner? Having life insurance can help your employees have confidence that, should they pass away, their family will have a financial safety net to replace lost income, cover final expenses, everyday living expenses, and long-term obligations that may otherwise cause them financial strain. Life insurance can even be used to help fund a child’s education.
It’s a key benefit to help you attract and keep quality employees.
When candidates are searching for a new job, benefits are a main differentiator, and prospective employees tend to consider a position’s benefits before they apply. That includes life insurance. Whether you cover the premium or offer employee-paid, voluntary life insurance, group rates make coverage through an employer an affordable option for employees. Including life insurance in your benefit package can make you stand out against organizations competing for the same candidates—and help you hold on to the good employees you’ve already hired.
It can be a budget-friendly option for you to offer.
If you think offering life insurance to your employees is out of your price range, think again. There are plenty of affordable life insurance solutions available. You can pay all, part, or none of your employees’ benefits, depending on your needs and goals. And keep in mind, group life insurance premiums are based on an overall assessment of a company’s risk. Spreading that risk helps bring group rates down, offering an affordable coverage option for employees.
Offering life insurance can help you enhance your company culture.
For many employers, building a strong company culture is about creating an environment that brings your core values to life. Culture is often what drives employee satisfaction. It makes employees feel like they belong, like they’re valued. That’s why including life insurance as an employee benefit plays a solid role in shaping your culture. It shows you put your employees first, and that you’re an employer who wants to help employees have a more secure financial future. For this reason, offering life insurance can help you see improvements in employee turnover, not to mention a general boost in productivity and company loyalty.
The best life insurance policies can be catered to your business needs
Your business—and employees—are unique. Fortunately, you can customize your group life insurance to make it the right match for you. As you’re considering life insurance policies, think about these questions:
Theodore & Associates offers free, comparative quotes on group life insurance from multiple insurance carriers so you can get the best possible rate, whatever your group size or benefit goals.
Contact us to find out how to protect your employees with the right life insurance.
Adam and Bob were best friends since junior high school. They shared an apartment in college, majored in the same field, and even went to work for the same company. When they were in their mid-30s, they came up with a great idea for a product that would become very popular, and the two decided to venture out with their own business. They decided to form a partnership with each owning 50%. The business soon began to flourish.
Two weeks after his 47th birthday, the seemingly healthy Adam suffered a massive heart attack and died. Upon his death, Adam’s ownership in the company was transferred to his wife, Cathy. Having known Bob for many years, Cathy left control of the company to him and the business continued to prosper.
Two years later, Cathy met Donald and after a whirlwind romance, the two were married. Donald became very interested in the stock in Cathy’s late husband’s business. Eventually he would begin having ideas about how the company could be better run. Although he had no experience to back his ideas, being a good wife, Cathy would make these suggestions to Bob. The relationship between the partners began to suffer from this tension.
Not long after Cathy and Donald’s third anniversary, Cathy was diagnosed with cancer and soon she also passed away. Like many people, Cathy had failed to plan properly for her future, and under community property laws, her ownership transferred to Donald at her death. Donald was now a 50% owner of the company with an equal authority in how the business was run.
Bob and Donald rarely agreed on the operation of the company and although he had years of experience and knowledge far superior to Donald’s, Bob was unable to override Donald’s ideas. Time spent on these disagreements, dissatisfied customers and mounting costs would all prove too much for the company, and on the 20th anniversary of Adam and Bob opening the doors of the company, they would be closed for good as the owners filed for bankruptcy.
A Simple Solution
A very simple yet often overlooked strategy could have helped avoid this unfortunate end to the previously happy story. A buy-sell agreement is a legally binding clause in a partnership agreement that controls what happens if one of the partners dies or otherwise needs to leave the partnership.
Typically, the agreement sets a price and gives the surviving partner the option to buy the deceased partner’s share from their estate. In the story above, this would have let Bob simply buy Adam’s ownership interest, allowing him to maintain full control of the business and avoid the other problems.
This strategy runs into difficulty at the time of the partner’s death if the surviving partner does not have sufficient capital to make the purchase. Keyperson life insurance helps to solve this problem. With this product, the business buys a life insurance policy, equal to the agreed upon purchase price, on the life of each of the partners with the other partner listed as beneficiary. Death benefit of the insurance is then used to pay the deceased partner’s estate and transfer ownership.
With the business listed as the owner of the policies, they are considered business assets and premiums are allowable business expenses. This allows the partners to successfully plan for the future of the business while receiving some valuable tax benefits as well.
For more information, please visit the Life Happens blog.