Life insurance protects your employee’s family against the risk of their premature death. In the event of an employee’s death, prematurely, their beneficiary is paid the amount of coverage provided by the plan of benefits. A beneficiary is the person(s) the employees want their assets to go to.
Typically, group life insurance policies are term insurance. Term insurance is a type of life insurance that provides coverage at the lowest possible cost by only insuring the possibility of death during a term period. As a result, group term life insurance policies do not have a lot of enhancements or features to them – no cash values or savings features.
The employer and the Insurance Company will agree upon the amount of the benefit, which will typically be either a flat amount or a percentage of the employee’s salary. Generally, if employees are an actively at work, they qualify for the group term life insurance policy. However, there may be restrictions on how much coverage they can have without having a medical examination.
Some Life Insurance policies will have an Accelerated Death Benefit provision. This provision provides a terminally ill insured an advance on their life insurance benefit to help pay for unexpected personal expenses or medical expenses not covered by insurance. However, there are no restrictions placed on the use of the benefit payment. This type of benefit is intended to help relieve the financial burden associated with a terminal illness.
Other policy provisions that may be available to an employee: Individual Conversion Rights and Waiver of Premium Benefits. For additional information on this provision, you should consult with your insurance company.