Benefits

Helping Employees Understand the Value of Life Insurance

Although life insurance is one of the most common employer-provided benefits, many employees do not take advantage of this coverage. As an employer, you are well-positioned to educate employees on the importance of having a life insurance policy.

What’s in it for you? Educating employees about life insurance can yield higher enrollment, greater appreciation for your benefits package, and increased loyalty to the company. Many employees are interested in learning how to become financially secure, and education from their employer can foster a stronger company-employee relationship.

Why It’s Important

Many employees have never considered purchasing life insurance, or they may think it is an unnecessary expense at this time in their lives. Help your employees think through their needs and the benefits of coverage with probing questions, such as:

  • Are you the primary household income provider?
  • Do you have a mortgage, college loans, or other substantial debt?
  • How would your family support themselves if you passed away unexpectedly?
  • Could you (or your family) afford tens of thousands of dollars in medical bills and/or funeral costs?
  • Who would have the burden of paying any debt or other financial responsibilities that you leave behind?

Thinking about these issues can be difficult, but you can help your employees consider their financial responsibilities so they can take action to protect their loved ones in the event of a catastrophic accident or illness.

Teach the Basics

Regardless of what coverage you offer, teach employees the basics of life insurance, starting with the main types of coverage – term and permanent – and the benefits of each. Depending on the coverage available to employees, a combination of term and permanent coverage may be the right solution.

Term

Term life insurance is coverage over a specified time period, though it can often be renewed or converted to a permanent policy. Term coverage offers a death benefit, but no cash value. It is a good option for those looking for a lower-premium option or people who have short-term coverage needs. Offered through your group policy, this can be very affordable for employees, but it offers less stability long term because premiums can greatly increase upon renewal.

Permanent

Any coverage besides term is a form of permanent life insurance. Types of permanent life insurance include whole, universal, and variable. Premiums for permanent coverage start higher than term but are typically more consistent throughout the life of the policy. This coverage offers a death benefit paired with a cash value savings component, so it is of more value later in life.

Promote Your Coverage

When teaching employees about life insurance, it’s helpful to educate them on the specific coverage you offer. Provide ample information about the type(s) of coverage offered, the premiums, the benefits, enrollment requirements, restrictions, and any other details they need to know.

In addition, let employees know the advantages of buying coverage through your company employee benefits package, including:

  • Lower rates through your group policy than if buying individual coverage.
  • No medical exam/review required for group policies (generally). Individual policies usually require medical reviews and may charge much higher premiums or deny coverage based on unfavorable results.
  • Convenience of purchasing through the workplace.

For more information on this topic or assistance in educating your employees on the benefits you offer, contact your Leavitt Group insurance advisor.

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