What is group life insurance?
Group life insurance is a type of life insurance in which a single policy covers an entire group of people and pays a tax-free lump sum to the beneficiary. Typically, the policy owner is an employer, and the beneficiary is the employee. Group life insurance is often provided as part of an employee benefits package. The cost of staff life insurance is often far less than what the employee would pay for a similar amount of private insurance protection.
The advantages of group life insurance
Benefits can be set at a fixed amount, or calculated as a multiple of salary.
If the group has the minimum numbers (usually between 10 or 15 members) all members are accepted without any exclusions or extra charges.
Group life cover has two things going for it:
- It’s easy to qualify.
Unlike an individual life insurance policy, where you might be deferred, group life cover is guaranteed and there are no medical questions. The insurer bases the premium on the risk of the group as a whole and considers such factors as the ratio of women to men, members’ ages and the kind of work they perform. - Premiums paid by employer.
When offered as part of a staff benefits package, the cover is often free to the employee or subsidised by the employer.
Free life insurance is a great deal, but think of group life as a supplement, versus a replacement, for an individual life insurance policy.
Experts generally advise against relying solely on employer-provided group life for protection because you don’t control the policy, the employer does.
Why offer group life insurance?
No matter what stage of life your employees are in, having life insurance is important to protect their loved ones and their long-term financial plans.
Offering group life insurance is a great way to enhance your benefits package, which can help you attract and retain quality employees.
Benefits for your employees
- Employees can get coverage at a reduced cost compared to most personal plans
- Help protect your employees and their family’s health
- Help reduce financial stress if something happens
- No medical questions or health checks
Benefits for your business or organisation
- Help improve morale and increase productivity
- Can be less expensive than providing salary increases
- Maintain a competitive edge in the job market
- Attract and keep key employees
Average Cost Of Group Life Insurance in 2024
Here is a table that shows examples of two clients who offer Life Insurance benefits to their employees.
The first client is a larger hospitality group, while the second small Pharmaceutical firm.
As you can see, the cost of providing Life Insurance benefits can vary significantly per employee, depending on factors such as employee demographics and level of coverage.
| Hospitality Group | Pharmaceutical | |
| Location | Nationwide | North Island |
| Employee | 180 | 32 |
| Level of Life Cover | $200,000 | 2 x Annual Income |
| Cost Per Employee | $59,00 per month | 90,00 per month |
How does group life insurance work?
Life insurance helps your employees put the people in their lives first. If an employee passed away, the life insurance proceeds would go to the people designated as beneficiaries.
Those funds can help loved ones manage financial obligations, such as:
- funeral expenses,
- mortgage or rent,
- university or college funding,
- daily living expenses,
- and more.
How is group life insurance paid?
You can choose to pay for all, part, or none of the premium. If your budget is tight, employees could pick up the entire cost of premium with voluntary staff life insurance.
What happens to the group life insurance if an employee leaves?
Sometimes employee leave.
And especially if they’ve had some health issues occur during their time with your company, obtaining new cover might be difficult.
Most workplace life insurance policies have a continuation option, where the employee can continue his or her insurance cover after leaving employment.
FAQ's
How can I get a quote?
It is easy to get started with group life insurance.
If minimum numbers are met, group members are approved for cover (without any exclusions or extra premiums) without qualifying questions and at wholesale rates.
To quote a group scheme, the following employee details are needed:
- annual salary
- date of birth
- gender
- job title
Must all employees have the same level of benefit?
No. You have a great deal of flexibility and can choose different levels of benefits for different types of employees, such as directors, managers and staff. Or you can offer the same level of benefits to all. In addition, if you select a voluntary scheme, employees can choose their level of cover and protection plan.
Similar workplace insurance benefits
Group Total Permanent Disablement
(TPD) Insurance pays a lump sum benefit if you are no longer able to work due to an injury or sickness
Group Income Protection
Group income protection provides an income for an employee when they’re unable to work due to illness or injury
Group Critical Illness Cover
A tax-free cash lump sum if your employee has been diagnosed with a specified serious illness or condition.
Workplace Medical Insurance
Jump the waitlists and give your employees access to medical treatment. Your staff can therefore recover sooner.
Compare Company Life Insurance Quotes & Get Expert Advice
Creating a competitive staff benefits package can be a bit of a headache.
All across New Zealand, we help small businesses with staff insurance packages so the companies can focus on what they do best.
We are here to assist you in setting up and managing your employee benefits in the most appropriate way possible while also securing the best possible premiums.
