Group Life Insurance is a compelling benefit for your employees and their families, in the event of an employee death.
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What is Group Life Insurance for building design professionals?
In the event of the death of an employee, Group Life Insurance provides financial benefits to the employee’s family members or other beneficiaries. Your building design business can offer Group Life Insurance as an employer-sponsored benefit to employees.
Group Life Insurance, along with group health insurance, group disability insurance, and retirement plans, are typically important parts of a comprehensive employee benefits package. Offering a competitive benefits package will help keep your employees happy and healthy while also serving to attract and retain talent.
- Your environmental engineering firm is trying to recruit a fresh graduate from the best civil and environmental engineering undergraduate program in the state. He decides to join your company after comparing your compensation and benefits package, which includes Group Life Insurance, with those of competing firms.
How does Group Life Insurance for building design professionals work?
Your company will pay a premium for the employees that are covered under your Group Life Insurance plan. Employees participating in the plan will choose one or more beneficiaries, typically close family members such as their spouse or children. In the event an employee dies, the named beneficiaries will receive a payment from the insurance company.
Why should I offer Group Life Insurance?
Group Life Insurance is a popular employee benefit that offers peace of mind for your employees and their beneficiaries in the event of an employee death. The Bureau of Labor Statistics (BLS) reports that 60% of all workers had access to employer-sponsored Group Life Insurance and 98% of those workers chose to participate in their employer-sponsored plans.
Offering Group Life Insurance as part of a comprehensive benefits plan keeps your benefits package competitive with other similar firms. At the same time, it contributes to the financial and emotional well-being of your employees.
- Your chief architect supports four children with his salary at your firm. He feels a sense of peace knowing that your company’s Group Life Insurance policy will pay out benefits to his children if he dies unexpectedly.
At least two people are required to form a group for Group Life Insurance. If you decide to form a group for Group Life Insurance and your group has less than 10 employees, you’ll be required to provide life insurance to all your full-time employees.
Your company will need to renew Group Life Insurance every year as it is generally term life insurance. Only employees who are currently working for your company can be covered by the plan.
While individual life insurance usually requires a medical exam before the policy is issued, Group Life Insurance policies do not require your employees to submit medical information or take a medical exam to qualify for coverage. This is called “guaranteed issue,” and it’s possible for Group Life Insurance because there’s a relatively small amount of coverage per employee, and the risk is spread among the group.
Who pays for Group Life Insurance policies?
It’s very common for companies to pay for Group Life Insurance for their employees if it’s offered. The Bureau of Labor Statistics reports that 95% of workers with Group Life Insurance coverage had the premium fully paid for by their employer.
How much coverage to offer
As a building design firm, you can choose the amount of life insurance coverage to offer to your employees. Two popular options are offering a flat rate per employee or a multiple of an employee’s salary. It’s also common to offer different benefits to different classes of employees. For example, an architectural firm might offer a flat-dollar benefit to support staff such as administrative professionals while offering a multiple of salary to architects.
Common for workers who are part-time or who have fluctuating or low wages, you may choose a flat benefit, such as $10,000 or $25,000 per employee. The BLS reports that the median flat dollar benefit was $20,000 in 2018.
Multiple of Salary Benefit
It’s common for companies to give their salaried employees a multiple of salary as the life insurance benefit, typically one or two times their annual salary. For example, if one of your engineers earns $150,000 per year, and your company offers a two-times life insurance benefit, the employee’s beneficiary would receive $300,000 if the employee died and was covered by the plan. Among employees with the multiple-of-salary benefit:
- 64% of workers had one-times salary as their life insurance benefit
- 9% had 1-2x of their salary as the benefit
- 22% had two-times salary as the benefit
Your company can give employees an option to purchase additional life insurance coverage beyond the coverage you pay for. The supplemental coverage typically increases the employee’s coverage up to 3-4x their salary. The employee usually pays for any additional premiums.
Your business can also set up your plan to give employees the option of continuing their life insurance coverage after leaving your company. The premium would then be paid for by the former employee. Older workers often find this option attractive since individual life insurance is more expensive for older people, while younger workers may find better rates on the individual market.
The price of your company’s Group Life Insurance policy will be determined based on the size of your company, the age and gender of your employees, and your company’s industry. Companies operating in more hazardous industries will have higher premiums, so a construction firm, for example, will generally pay more than an architectural firm. For larger companies, the insurance company will adjust your premiums on an annual basis based upon the actual loss history, but this generally does not apply to smaller companies.
- Two engineers at your civil engineering firm died last year, and your Group Life Insurance policy paid out benefits to their beneficiaries. In the next year, your premiums for Group Life Insurance increase because of your loss history.
Accidental Death & Dismemberment (AD&D) Coverage
Offered by many life insurance policies, accidental death & dismemberment benefit pays out if a covered employee is killed in an accident. Other types of injuries, such as the loss of limbs, speech, or sight, may also trigger a partial benefit payout.
Deaths from murder, car accidents, heavy equipment accidents, and drowning are just some of the types of accidents covered. Illness, suicide, drug overdoses, or natural causes are generally not included.
- One of your architects likes to surf in his free time. In search of big swells on a trip to Hawaii, he is hit by a powerful wave and never surfaces. After his death, AD&D insurance pays out benefits, in addition to Group Life Insurance benefits.
Similar to Group Life Insurance, the benefit for AD&D insurance can be either a fixed dollar amount or a multiple of an employee’s salary.
AD&D insurance is paid in addition to the benefit paid by the Group Life Insurance policy. For example, suppose the architect in the example above has $150,000 of Group Life Insurance and $50,000 of AD&D insurance. If the employee accidentally drowned, his beneficiaries would receive $200,000 from the insurance company. However, if the employee dies from a heart attack, the beneficiaries would only receive the $150,000 of life insurance coverage, as AD&D insurance does not cover heart attacks.
Dependent Life Insurance
Your business can also offer Group Life Insurance to your employee’s dependents, e.g. a spouse, domestic partner, or children. The employee will usually pay for the coverage through payroll deductions. The dependent’s coverage is commonly capped at 50% of the employee’s amount of coverage. For employees, this is often an easy way to obtain a small amount of life insurance for their dependents at a rate that may be better than the rate on an individual life insurance market for the same coverage.
Building design firms can offer Group Life Insurance to attract and retain talented professionals and take care of their financial well-being. Group Life Insurance, often less expensive than life insurance purchased on the individual market, pays out benefits to close family members or other beneficiaries in the event that the insured employee dies. For many families, Group Life Insurance is an important feature of a benefits plan that contributes to their financial stability and peace and mind.