Life insurance is a well-liked job perk that both companies and employees can enjoy. Offering it is entirely optional, but it’s worth thinking about if you and your employees could benefit from the potential savings associated with group insurance. 

Before you offer a life insurance policy to employees, you will need to think about what employees to cover, the sort of coverage to offer, and the amount of coverage if you decide to include life insurance in your employee benefits package. Finding vendors and making sure the plan is successfully implemented will be your next steps.

Who Needs Employer-Provided Life Insurance?

You must choose which employees will receive these benefits once you’ve determined that you want to provide life insurance. All of your full-time employees may be eligible for group-term life insurance coverage, especially if you can achieve better rates (and avoid individual medical examinations) with a larger group.

Unless you can satisfy specific nondiscrimination standards, you won’t be allowed to deduct the premiums for life insurance if you want to provide it as a special benefit to a select group of key employees.

What Are the Nondiscrimination Standards That You Have to Adhere to? 

Nondiscrimination laws are typically intended to deter you from offering advantages that are exclusive to those who are paid the highest salaries or that prevent lower-paid employees from taking advantage of them due to the cost of the benefits. If any of the following conditions are met, a group-term life insurance plan does not discriminate against an employee’s eligibility to enroll.

  • At least 70% of all employees benefit from the plan
  • All participating employees, at least 85% of them, are not key personnel
  • Workers who meet the requirements under the categorization established by the firm and certified by the IRS will benefit from the plan

You can give life insurance to small sub-groups of employees through group-term life insurance, the most popular kind of employer-provided life insurance, if the distinctions are made on the basis of:

  • Marital Status
  • Job Responsibilities
  • Compensation
  • Duration of service
  • Participation in a profit-sharing, stock bonus, accident, and health, or pension plan
  • Various other aspects of employment

Life Insurance Benefits That You Might Provide to Employees

In addition to group-term life insurance, you may also offer the following types of insurance:

  • Accidental Death and Dismemberment of a Group

This insurance is referred to as “AD&D” in business and it provides benefits to the employee’s beneficiary in the event of an accident-related death or if the employee loses the use of a body part (loss of one arm and leg, for example, may result in payment of a percentage of the total benefits).

  • Accident Coverage for Business Travel

This insurance only provides coverage in the event of an employee passing away while on business. This would not be worth your money if your employees don’t travel or don’t travel very often.

  • Riders on Life Insurance Coverage

An additional feature or benefit that you might include in an existing insurance policy is known as a rider. Plans can be customized to some extent by adding any number of riders, with unlimited varieties available. 

For instance, you might modify a group term life insurance policy to include an accidental death and dismemberment rider, doubling the death payout in the event of an employee’s accidental death. The numerous riders you can add to a life insurance policy will be explained by your insurance agent.

If you are considering employer-provided life insurance, contact the experts at Panichelle Insurance today to learn more!

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