As a business owner, you are probably already aware of the many ways life insurance can be used to protect the financial assets of your business and personal wealth. However, your employees may not be as well informed. According to LIMRA, an industry research group, many consumers have only a basic understanding of life insurance. Employees often look to employers to provide access to financial products including life insurance.
Here are two reasons to offer life insurance as part of your group and/or voluntary employee benefits package:
1. Families financially unprepared
Previous generations commonly used life insurance to create wealth. Until the late 20th century, life insurance was a primary savings instrument for many families. Only 57 percent of consumers are covered by life insurance today. Now, middle class consumers report two primary financial goals: 1) Save for retirement. 2) Build an emergency savings fund. Actual financial behavior though is out of step with these stated goals. Less than half of this consumer group contributes regularly to a savings account.
The point is, most middle income families are not financially prepared for the unexpected. Many are living paycheck to paycheck. The life insurance benefit included in your employee benefit package is often the only life insurance many households have.
2. Middle income most at risk
If we filter the profile of Americans covered by life insurance, middle-income consumers fair even worse. Only 46 percent of the middle class carries individual life insurance. Certainly a stressed budget contributes somewhat to these numbers but lack of access to a financial professional is often cited as a reason for not buying life insurance.
Group life insurance is commonly offered at levels of two or two and one-half times the salary, and provides only minimal coverage, usually term. Employees often need more protection, and that is where voluntary programs come in. Voluntary individual life insurance programs offered in the workplace usually have high participation rates, even more so when spouses are eligible to apply.
Offering a voluntary individual life program brings a valuable benefit to employees along with access to the advice and counsel of a financial professional – and all without increasing your employee benefit expenses.
A voluntary life insurance program usually includes both term and permanent coverages. Premiums are often paid via payroll deduction. Working with the advisor, the employee decides what type of insurance and the amount of insurance. Advisors may also offer other insurance plans if the situation calls for it. One-on-one meetings with the advisor can be scheduled either during or after work hours, but usually at the workplace.
Interesting in learning more? Contact Heffernan Insurance Brokers to learn more about adding group or voluntary life insurance to your employee benefit package.
For a copy of the LIMRA 2015 Insurance Barometer Study, click here.