As a business owner, you’re always looking for ways to support and retain great employees and benefits like group life insurance can play a big role. But is it the right move for your company? Let’s break down the key reasons why you might (or might not) want to offer group life insurance, and what you need to know about how it’s taxed. 

Why You Might Want Group Life Insurance for Your Business 

1. Attract and Retain Talent
   Offering group life insurance can make your business more competitive in the job market. Employees see it as a valuable part of a benefits package, especially when they get coverage without medical exams or high premiums.
2. Affordable Coverage for Employees
   Group policies are typically more affordable than individual plans. Since the risk is spread across a larger group, premiums are usually lower, making it cost-effective for both you and your team.
3. Easy Enrollment
   Group life insurance often comes with simplified underwriting. That means no lengthy applications, medical exams, or complicated processes. This convenience is a big plus for both employers and employees.
4. Demonstrates Employer Care
   Offering life insurance shows your employees that you’re invested in their well-being—not just professionally, but personally. It’s a sign of a people-first culture, which is great for morale and long-term loyalty.

Why You Might Not Want Group Life Insurance 

1. It May Not Be Enough for Employees
   Most group policies offer limited coverage (e.g., 1-2x salary), which may not meet employees’ long-term financial needs. They may still need to purchase additional individual coverage, which can lessen the perceived value of the benefit.
2. Limited Portability
   If an employee leaves your company, their group life insurance usually doesn’t follow them unless there’s an option to convert it to an individual policy (which is often expensive). This can make the benefit feel temporary.
3. Cost to Employer
   While relatively affordable, group life insurance still represents a recurring cost. For small businesses or startups with tight budgets, this can be a factor in deciding whether or when to offer it.

Final Thoughts 

Group life insurance can be a smart, impactful way to care for your team and boost your business’s benefits offering. But like any decision, it’s important to weigh the pros and cons especially how it aligns with your goals, budget, and workforce needs.   

If you’re considering adding group life insurance or want to review your current plan, our team can refer you to a great benefits advisor.