Life insurance is one of the most common employer-provided benefits, yet many employees fail to appreciate its value. As an employer, you are in the position to educate your employees on the importance of this coverage. What’s in it for you though? Educating employees about life insurance can help yield higher enrollment, greater appreciation for benefit packages, and overall company loyalty. You may be surprised at how many employees are not financially savvy but are interested in learning more. That’s why we’re gonna cover the importance of educating employees about life insurance and the essential basics every employee should know.
Benefits Of Life Insurance
Why Is It Important?
Many employees have never considered life insurance, or think it’s an unnecessary expense at this time of their lives. However, having life insurance is vital for people of all ages. The following questions can help your employees think more clearly about their needs and benefits of coverage:
- Are you the primary household income?
- Do you have a mortgage, college loans, or other substantial debts which are not paid off?
- Does your family have the means to support themselves if you die?
- Could you (or a family member) afford tens of thousands of dollars in medical bills or funeral costs?
- Who would have the burden of paying off the financial responsibilities that you leave behind?
Getting your employees to think about these issues isn’t fun, but it’s important so that they consider their financial responsibilities and take action to protect their loved ones in the unfortunate case of an accident or illness.
Teach The Basics
Regardless of what coverage you offer, teaching employees the basics of life insurance can be beneficial to your business. Start by identifying the main types of life insurance and then get into the benefits and drawbacks of each.
Term
Term life insurance is coverage over a specified period, although it can often be renewed or converted to a permanent policy. Term coverage does offer a death benefit, but no cash value. It’s a solid option for those who can’t afford high premiums but still want coverage, or those who have short-term coverage needs. This coverage can be very affordable for employees when offered through a group policy but offers less stability long-term because premiums can greatly increase upon renewal.
Permanent
Any coverage besides term will be a form of permanent life insurance. Permanent life insurance includes whole, universal, and variable coverages. The premiums for permanent coverage start out higher than term but are usually more consistent throughout the life of the policy. Additionally, this coverage offers a death benefit paired with a cash value savings component, creating greater value later in life.
Ensure that you emphasize to employees that any coverage is better than no coverage and that they should seriously consider their financial needs and loved ones when deciding on a plan. Depending on the coverage available to employees, a combination of term and permanent coverage may be a good solution.
How Much To Buy?
Life insurance is one of the key components to benefit packages, but it can be hard to determine how much to buy. One common way many people decide is based on an income replacement calculator, between 5 and 10 times the amount of your current income. When purchasing life insurance, it’s also important to consider your personal circumstances. Are there any expenses, such as college tuition that may arise in the future? Don’t forget to consider potential medical or funeral costs as well. Above everything, you want to make sure your family does not get stuck with bills, debts, or expenses that they cannot take care of.
Promote Your Coverage
When teaching employees about life insurance, be sure to educate them on the specific coverage you offer as well. Provide ample information about the type(s) of coverage offered, the premiums, the benefits, enrollment requirements, restrictions, and other important details.
In addition, be sure to sell employees on the advantages of buying coverage through your company. Not only will your employee appreciate the financial advice you’ve provided, but they’ll realize the value of the benefits your company offers. These advantages include:
- Lower rates through your group policy instead of buying individual coverage
- Generally, no medical exam/review required for group policies; this is in contrast to individual policies, which require medical reviews and may charge much higher premiums or deny coverage based on unfavorable results
- The convenience of purchasing at work instead of having to stop around
If you’re looking to add life insurance coverage or change your coverage options, Alltrust Insurance would be happy to assist you.
Why Purchase Life Insurance Now?
Buying life insurance may seem unmanageable right now, but it could be a smart decision. Unlike many other benefits, life insurance is actually more affordable right now than in the recent past. Plus, during this tough economic period, ensuring that your family will be financially secure in the future is more important than ever.
Offering Life Insurance To Employees
Like many other business owners, you may have overlooked life insurance when reviewing employee benefits packages. After reading through the importance of life insurance for your employees, you may want to start offering life insurance coverage or change current coverages. At Alltrust Insurance, we are more than happy to help you with your employee benefit needs. We understand that your employees are the most important asset to your company and our goal is to help you receive all of the resources necessary to build a healthy workforce. For more information on how we can help you navigate life insurance, please contact us through our website today!
