Life insurance is an important employee benefit. Here's why.

Life insurance is an essential form of financial protection for employees – especially those with families – and many feel the need has never been greater. According to the Centers for Disease Control, life expectancy in the US had the largest one-year decline since World War II in 2020.1 The simple reality is, the pandemic has reminded people of their mortality – and the need for life insurance. Recent LIMRA research shows that COVID-19 has lifted the likelihood to buy life insurance, with almost 1 in 3 (31 percent) saying they are more likely to buy because of the pandemic.2

Why should employers offer life insurance in their benefits package? Because group coverage is usually the easiest way for employees to get it – 74% of those with life insurance get it from their workplace.3  Still, more than 60% have either no life insurance or less than industry recommended coverage amounts,3 in part because people tend to overestimate the cost of life insurance. Most don't realize that the average monthly premium can be as affordable as a daily cup of coffee – and group rates can help make it even more affordable. That can be appealing to millennials – less than 50 percent of whom own life insurance3

Read the Guardian Workplace Benefits Study, "Protecting those we love: The role of life insurance in financial wellness."

How Guardian group life insurance works

Your business is unique, and your Guardian group life plan will be tailored to your unique needs. While some companies offer permanent universal or whole life insurance - typically to executives or key personnel - most employee plans are group term life insurance. Specifically, these plans are for "yearly renewable term" insurance, which means that employees are buying life insurance benefits for a year at a time. Coverage renews each year they're employed (unless they choose otherwise), but rates increase in five-year age increments. In addition, there may be one class of rates for all employees – "uniclass" – or separate Preferred and Standard rates that make policies less expensive for non-smokers.

Guardian Uniclass Rates

Employee's Age <30 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69
Rate Per $1,000 $.10 $.12 $.16 $.26 $.56 $.72 $1.16 $1.66 $2.90

Guardian Preferred/Standard Rates

Employee's Age <30 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69
Preferred Premium Class $.09 $.10 $.14 $.21 $.41 $.59 $.98 $1.44 $2.57
Standard Premium Class $.16 $20 $.26 $.43 $.84 $1.22 $1.89 $2.57 $4.21

Child(ren) rate is $.21

Basic and supplemental protection

As an employer, you can choose to provide two kinds of group term life benefits to your workers: basic and/or supplemental. Basic coverage is an initial, limited amount of life insurance typically paid for by the employer. It could be a specific coverage amount (for example, $10,000) or tied to earnings (for example, 1X annual salary). Most plans also let employees buy optional supplemental life insurance as a "voluntary" (i.e., employee-paid) benefit. Whether your company pays for some, all, or none of the cost, employees realize a number of advantages compared to purchasing individual life insurance:

  • Affordable premium payments  Group rates are typically lower than those for a comparable individual plan.
  • Simple qualification  There's usually no need for a medical exam, and there may not even be health questions. The application process is also simple because the employer already has most of the personal information needed.
  • Easy payroll deduction  The employee doesn't have to worry about paying premiums – it's automatically taken out of their pay.

Portability

Guardian provides the option to include “portable” coverage, which means employees can take their life insurance with them if they leave the company.  If that happens, there’s no added cost to you (the employer) and you’ll no longer have to pay for any life benefits provided.

Taxes

As an employer, you can provide employees with up to $50,000 of basic group term life tax-free, meaning they don't owe payroll taxes on the premium amount, and their beneficiaries won't pay taxes on the death benefit. However, premiums for any employer-paid life insurance over $50,000 are considered a taxable benefit and reported on the employee's W-2 as "imputed income." This also helps ensure that any death benefit will be paid to the employee's beneficiaries without being taxed.

Guardian features that enhance employee protection – at little or no added cost

We offer a wide variety of complementary products and features that address employees' needs:

  • Accidental Death & Dismemberment (AD&D) – Help increase financial confidence for employees by offering AD&D insurance as a complement to a Guardian life plan to cover accidental death and injuries.
  • LifeAssistSM– Provide employees with the critical income needed should they suffer a severe or catastrophic disability.
  • Will Preparation Services – Offer employees complimentary access to estate planning professionals, online planning documents, and a resource library. Standard with all voluntary life plans.3
  • Employee Assistance Program (EAP) – Our EAP gives employees the opportunity to access confidential, one-on-one, and web-based support on personal, financial, and legal matters. Workplace tools for employers are also available.

Our enrollment support takes the work off employers by offering:

  • a wide array of product education and decision support resources like onsite meetings, phone help, and online tools
  • multiple online enrollment options through proprietary systems or benefits administration platforms driven by the latest technology
  • re-enrollment options that allow employees to increase coverage over time without medical exams

Frequently asked questions about life insurance for employees

What is group life insurance coverage?

This is life insurance that you get as part of a group – typically through work, but you can also get it is as part of a professional organization or member group. Because you're one of many people buying insurance together, the rates are typically lower than they would be for the same amount of coverage purchased as an individual.

Does group life insurance pay out?

Group policies can provide employees with a low-cost coverage option that's also easy to get - there may not even be a policy form to fill out. Many group plans also offer value extras, such as accidental death and dismemberment coverage, coverage for a spouse or family member, or accelerated benefits to help those who are terminally ill. However, as with all financial decisions, you should also be aware of the limitations. For one, it's typically term coverage that is not permanent and doesn't build cash value (a feature of permanent policies that can help you save for retirement). Secondly, if you leave your employment, you could lose coverage if the policy isn't portable (although Guardian's policies are usually portable). Finally, the amount offered may be lower than you could get with an individual policy. (You can look at term life insurance quotes to get an idea of your total need.) But if you already have individual life insurance for part of your needs, it can be a great way to get the additional coverage

What is the difference between group life insurance and life insurance?

"Life Insurance" is a broad term that encompasses all the ways you can get permanent or term life insurance, either as an individual or – in the case of group life insurance – as part of a group. When you get an individual policy, you own the insurance contract; with a group policy, the sponsoring company or association owns the contract. However, the coverage you get works essentially the same way: in either case, if you have an in-force policy with a $100,000 death benefit, your loved ones will put in a claim if you pass away, and the policy will pay them a tax-free lump sum.

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Disclaimer

References

1 https://www.cdc.gov/nchs/pressroom/nchs_press_releases/2021/202107.htm

2https://www.limra.com/en/research/research-abstracts-public/2021/2021-insurance-barometer-study/

3The Guardian Workplace Benefits Study: 7th Annual, Financial Wellness Series Part 3, 2019.

Guardian Group AD&D and Life Insurance coverages are underwritten and issued by The Guardian Life Insurance Company of America, New York, NY.  Products are not available in all states.  Policy limitations and exclusions apply.  Optional riders and/or features may incur additional costs.  Plan documents are the final arbiter of coverage.

WillPrep Services and the Employee Assistance Program are provided by Uprise Health and its contractors. The Guardian Life Insurance Company of America (Guardian) does not provide any part of WillPrep Services or the Employee Assistance Program services. Guardian is not responsible or liable for care or advice given by any provider or resource under the services. This information is for illustrative purposes only. It is not a contract. Only the Administration Agreement can provide the actual terms, services, limitations and exclusions. Guardian and Uprise Health reserve the right to discontinue the WillPrep Services  and the Employee Assistance Program at any time without notice. Legal services will not be provided in connection with or preparation for any action against Guardian, Uprise Health, or your employer. WillPrep Services and the Employee Assistance Program are not insurance benefits and may not be available in all states. Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation.

2022-132184  20240531