Good employee benefits help improve retention, boost morale, and avoid an unexpected recruitment process.

A business life insurance is a great way to promote productivity and prevent high turnover. But if you are a new business owner, you might be unaware of this type of coverage. 

What is business life insurance? What are the basics you should know and understand? What are its advantages and drawbacks? 

These are a few questions that will pop into your head, and this comprehensive guide is for you! 

Business Life Insurance: What Is It Really? 

As the name implies, it is a life insurance policy companies buy for their employees. It is sometimes called group life insurance coverage. 

It is usually purchased in bulk to prevent every employee from paying costly premiums on individual life insurance policies. 

Does the business owner shoulder all the costs related to the coverage? Of course, as an employee, you want the company you are working at to pay for everything. 

But it is not always the case. Typically, employers pay a portion of the cost. Then, you will settle the rest, which is still convenient and reasonable on your part. 

What Are the Benefits of Business Life Insurance? 

Business owners can also benefit from life insurance. Here are a few of its advantages you cannot underestimate: 

Avoid Expensive Monthly Premiums 

Not everyone in your organization can afford to pay monthly life insurance. This is the reason companies shoulder a part of the premium, helping employees avoid expensive premiums.

Although there are still fees to settle, your people would really appreciate it. 

agent explaning to a businessman

Provide Peace of Mind and Security 

Employee unproductivity has been one of the top concerns for small, mid-size, and even large companies. 

While there are multiple factors that affect your team’s productivity, financial security is on top of the list.

According to the Consumer Financial Protection Bureau, employees are more likely to be less productive when they worry about providing for their families. 

As a business owner, that can put your operation at a disadvantage, which you do not want to happen.

What are you going to do now? Providing a good life insurance program can be a lifesaver. Your personnel will not only have peace of mind but also enable them to focus on their tasks. 

This type of workforce can play a critical role in your business’ success in the long run. 

Improve Retention

High employee turnover is another concern of most companies as it leads to a stressful recruitment procedure and other unexpected expenses. 

Imagine you lose your talented staff, and you are not prepared for that situation to take place. That could give you a headache, literally. 

What are the common reasons employees quit their existing job?

Aside from the lack of professional development opportunities and an engaging environment, employee benefits can be another culprit and offering life insurance will be of great help. 

Related:   Five Tools To Build a Strong Foundation for Your Business

Does It Have Any Drawbacks? 

Of course. A business life insurance also has disadvantages people should weigh in mind. Some of them are highlighted below: 

It Will Be Discontinued When an Employee Leaves the Company

Yes, you read it right. If an employee resigns from the company, the insurance coverage will be discontinued.

That’s frustrating, isn’t it? It is wise to have another insurance premium to avoid any discomfort along the way. 

employee meeting

Both Low- and High-Risk Policyholder Might Pay the Same Amount

This might be unfair for low-risk individuals. But this does not always happen because not every insurance company is the same.

In case you, as an employer, encounter this situation in the future, it is smart to look for other insurers. 

Then, make sure to do some research on your options. You can read their websites or visit review sites for more information. The one that provides quality services will be your best bet, indeed. 

Limited Control 

It is true that business life insurance can be less costly than individual coverage. That’s good news.

However, employees only have limited control over their life insurance. That’s why it is ideal to consider an individual premium for their convenience. 

What Are the Basics of Life Insurance? 

It is emotionally depressing to lose a loved one. But it is more stressful when the bereaved family is not financially stable.

This is where life insurance can help, which comes in different types. These are whole, universal, term, and variable universal coverage.

Whole life insurance offers permanent death benefit coverage for the insured. Aside from the death benefit, it features a savings component that may accumulate over time. 

Universal type of premium can keep the policyholders covered for the duration of their lives. What makes it different from the rest is that it comes with an investment savings element. 

Term life insurance guarantees payment of a death benefit as long as the policyholders die within a specified term.

If it expires, renewal of the term is advisable. It is also a brilliant idea to convert it to permanent coverage. 

On the other hand, variable universal coverage is available with a savings component, allowing the insured to invest its cash value.

Similar to the standard policy, it is extremely flexible. 

What is a Life Insurance Rider? 

Another advantage of insurance policies is that they can be customized with other options, commonly known as riders.

While there are several kinds of insurance riders, here are the four popular options: 

Accelerated Death Benefit 

As the name suggests, it gives the insured the ability to collect a part of or the entire death benefit. 

Accidental Death Benefit 

Although additional coverage requires extra costs, it provides fair financial assistance to the family of the policyholders when they die due to an accident. 

Disability Income Rider

A severe injury sustained from an accident can lead to a disability. So, a person might not be able to work in the office.

But with a disability income rider, the insured will receive a reasonable monthly income. 

Do you have further questions about life insurance? Please feel free to browse our site for more details!