Life insurance – an integral part of every benefits program

Life insurance continues to be the foundation of most competitive benefit packages. With good reason. It offers employees financial security, strengthens an employer’s ability to attract new talent and helps producers meet clients’ needs for expanded voluntary benefits.

Advantages of life insurance

The need is real

Nearly three-fourths of Americans agree that life insurance is the best way to protect against the premature death of a primary wage earner. In fact, life insurance beat out all other sources of financial assets or income that Americans would expect to use to help pay bills and to maintain their lifestyle if the primary wage earner dies.

Yet, many do not have adequate coverage for their needs.

  • Sixty-eight million Americans have no life insurance at all and those with coverage have far less than most experts recommend is necessary to ensure a secure financial future at premature death of a primary wage earner.
  • One third of U.S. adults carry no life insurance at all.
  • Among those who already own some life insurance, 40 percent believe they don’t have enough.

Employees recognize the need for more life insurance

There is a large gap between what Americans have and what they say they need. One fourth of primary wage earners feel they do not have a plan in place to provide a decent standard of living for their family if they died tomorrow. Approximately 12 percent would immediately have trouble meeting everyday living expenses, and another 15 percent would have difficulty keeping up with expenses after several months.

Employees appreciate being able to buy life insurance at work

More than 62 percent of Americans buy life insurance coverage at work. For many, it is the only coverage they own. There are good reasons why so many people take advantage of this employee benefit.

  • It's affordable — Group life insurance provided through an employer is a great way to fill gaps in coverage and the buying power of a large group helps keep rates affordable.
  • It's easy — Buying life insurance at work is convenient. Employees can pay premiums through payroll deduction. Choices under a group life insurance plan are often tailored to salary or job classifications to simplify options and make them easier to understand.
  • Simplified underwriting — Depending on the design of the employer’s plan and the type and amount of coverage elected, employees may be able to buy insurance without answering health questions or taking a medical exam. Most plans offer a certain level of guaranteed coverage for new employees and at the time of salary increases or life events.  
  • There's no pressure — Group life insurance is not sold on commission. Online self-service options for enrolling and making changes to coverage are especially attractive to busy executives and tech-savvy employees.
  • Coverage follows the employee — When they leave, the group employees often have the option to maintain their coverage by paying premiums directly to the carrier.
  • Opportunity to supplement savings — Today’s employees are taking a more active role in planning for their future and are aware of the need to shoulder their own health care costs in retirement. Cash value life insurance offers a way to supplement other savings plans to fill the gap between where they are and where they want to be financially. Please note that life insurance products may contain fees, such as mortality and expense charges, and may contain restrictions, such as surrender charges.

Source: LIMRA International, 2005-2008

A valuable benefit offering

Group life insurance as part of a comprehensive benefits package:

  • Helps attract and retain high-caliber employees.
  • Gives businesses a tax-deductible business expense.
  • Uses group buying power to secure competitive premium rates.
  • Insures large groups at a reasonable cost.
  • Can be customized to meet the needs of specific employee segments, such as unions or executives.

Most large employers provide a basic level of life insurance coverage to all employees. The option to purchase additional supplemental coverage helps employees meet their need for more financial security without adding to the employer’s benefits spend.

An affordable enhancement

As employees pick up more of the cost of benefits, employers are looking for new offerings to offset the takeaways. One way a business can put things back into balance is by adding or enhancing optional group life insurance programs.

We offer insurance products than can be tailored to meet multiple needs – basic employer-paid protection, supplemental employee-paid coverage or sophisticated executive compensation packages – and all of them can be integrated into one plan for ease of administration.

Group life insurance has moved well beyond the simple burial benefit it once was. Today’s plans offer high amounts of guaranteed coverage, simplified underwriting, coverage for dependents and portability. Unlike most other benefits, the cost of group life insurance is going down as mortality rates continue to improve and more services — such as will preparation, tuition fulfillment, travel assistance, identity theft protection and beneficiary financial counseling — are becoming part of the package, often without a separate charge.

63 percent of Americans believe life insurance protects their loved ones and provides peace of mind; yet more than a third of them have not purchased coverage themselves and 18 percent have no coverage at all. (“Global study shows Americans caught in cycle of anxiety,” AXA Equitable, 2007.)