Why Companies Buy Group Life Insurance For Their Employees
Group life insurance is a form of term insurance that is taken out as coverage for a group of people. This can be any kind of group or association but is most often a group of company employees. Because it is term insurance there is no cash component and the cover only lasts for a pre-determined number of years at which point the policy expires. There will be no cash pay out unless the covered person dies within the period covered by the policy. Life insurance is usually the responsibility of the individual but there are certain instances where an employer might buy group life insurance for their employees.Because group life insurance is generally more affordable than individual cover, companies may want to offer it as a benefit to their employees. Group life insurance can be used to attract potential employees as part of a company benefits package and is tax deductible so it benefits the company as well.
Employers operating in physically dangerous sectors of the job market may want to offer group life insurance to their employees so that there will be compensation for the employee's dependents should the employee die as a result of the hazardous work that they are employed to do. This is a gesture of goodwill on the part of the employer towards its employees and can help to put the company in a favourable light in the eyes of the employees. It is also generally well known that people have a tendency to avoid insuring their lives, particularly if they have trouble affording it. Thus a company can improve its social responsibility standing by providing group life insurance for its employees.
If group life insurance is beneficial to employers then it is even more so to employees. Medical checkups are usually not necessary to acquire this kind of insurance as the group cover as a whole will cover any unfit persons. More importantly, it is a way for a person to acquire life cover that they might not otherwise be able to afford. Not only will the employee's dependants receive financial assistance should the employee die but the employee themselves can receive compensation for being unable to work due to disablement while they are in the company's employ, that is, if the particular group life policy covers this. Furthermore, an employee can take the cover with them if they leave the company.