Group Life Insurance: Contributory V. Non-Contributory

Business owners in today’s competitive job market recognize the importance of attracting and retaining quality employees. Providing group life insurance is an economical way for you to provide a quality benefit that your employees will value and appreciate.

Group Life insurance covers the lives of multiple persons, such as some or all employees of a business, or members of a labor union, or members of an association. The person owning the master group policy in the above examples are the employer, the union and the association, respectively. The insured persons, whether they get the life insurance as an employee benefit, or make a contribution to its cost, or pay for it completely themselves, generally may name their own beneficiaries and are issued certificates that are subject to the underlying Group Life Policy. (Source: law.freeadvice.com)

As an employer, you have two options when it comes to what type of group life insurance you chose to provide to your workforce:

Non-Contributory (Employee Benefit)

As discussed in last week’s blog, many employers are beginning to offer ancillary products as an employee benefit to their staff, even if they aren’t currently offering major medical coverage. Among one of the most popular ancillary benefits offered by employers is group life insurance. If you opt to add group life insurance coverage as an employee benefit, the cost is relatively low per employee and your employees will appreciate the gesture. In this example, non-contributory means the employer pays 100% of the premium.

Contributory (Voluntary)

The benefit to offering voluntary life insurance to your employees is that they normally receive automatic-issue policies (not subject to medical underwriting, as is the case with individual policies). They will also receive a group discount, therefore the rate would be cheaper when part of a group policy versus opting to purchase an individual policy on their own. Even if you as the employer do not contribute to the premium, it is a value-add to the employee, as they most likely are receiving a reduction in premium.

Next week, stay tuned for more information about dental insurance as an ancillary benefit offering to your workforce.
 
Until then,
M.J.