While we know how important it is to have insurance for our home and cars, many people can forget the importance of life insurance as well. Offering this benefit to your employees can give them added peace of mind should anything happen to them or their loved ones. Most employers will offer a life insurance option to their employees as a mandatory part of the group benefits plan.
There are three basic options for life insurance – life and accidental death and dismemberment (AD&D), optional life and AD&D, and dependent life.
The mandatory life option can be offered in one of two ways – a flat amount of life insurance coverage, or an income based benefit of one, two or three times the employee’s income.
Optional life coverage is additional coverage employees can purchase on top of their basic coverage. This is normally offered in increments of $10,000, up to a maximum of $500,000.
Dependent life is an optional benefit that covers a plan member’s dependents. Optional life coverage can also be purchased for these policies.
When designing your benefits plan, the most important thing to do is find what options work best for you. There is no one-size-fits-all plan. In our next post, we will talk about short term disability plans and all the different options available for this benefit.