Life insurance awareness month: What employers need to know
Adding group life insurance that includes comprehensive “extras” to your benefits package is now a must for helping employees cope with stressful times.
The very real human and economic toll brought on by the COVID-19 pandemic has forced us to examine many facets of our lives and society. The current environment has people thinking about their financial future and their family should something happen to their wage-earning ability. Part of this calculation should certainly include life insurance for employees and employers alike.
Related: Life insurance: Not enough have it, and many don’t have enough
Many employees are not familiar with the fundamentals of life insurance and don’t know what happens to their coverage should they lose their job. This is why it is so important for employers to offer robust life insurance plans, to fully understand the benefits available through their chosen plan, and to effectively communicate the details of these plans to employees to encourage them to enroll—especially during these unprecedented times.
Choosing comprehensive life insurance for employees
Whether considering switching to another carrier or choosing a group life insurance plan for the first time, employers should first fully understand the two main types of employer-provided group life insurance. First, there is Basic Employer-paid Life, which many employers offer and cover part or all of the premium. Then, there is Voluntary/Supplemental Life Insurance, the cost of which is deducted from employees’ paychecks each month.
Considering the unique needs of each employee, the best way to ensure they are receiving adequate life insurance coverage is to offer both Basic Employer-paid Life and Voluntary/Supplemental Life. This way, the employees who require additional coverage beyond what is offered through Basic Employer-paid Life will have the option to scale the amount of their policy to meet their family’s needs. Now that the coronavirus pandemic has sadly highlighted the reality of unexpected death and depleted many Americans’ savings, it’s critical that your employees and their families are able to obtain sufficient coverage.
In addition to providing financial security to employees’ families in the event of their untimely death, a comprehensive group life insurance plan should also offer additional benefits to give employees and their dependents peace of mind through these uncertain times. These resources can include 24/7 virtual access to a licensed counselor to help with mental health issues; tools to help easily put together wills and other important legal documents; one-on-one counseling with a certified financial planner to help achieve financial wellbeing; legal consultation with an attorney; and identity theft services.
Adding group life insurance that also includes comprehensive “extras” to your benefits package is now a must for helping employees cope with stressful times, but it’s also important to understand what happens to these benefits should your business be forced to undergo furloughs or layoffs. That’s another important aspect to consider when choosing or switching group plans—continuation of coverage.
The role of continuation of coverage
The pandemic has highlighted the importance of understanding the provisions of the group life policy and underscored the need for continuation of coverage. The specific terms and conditions for continuation of coverage vary by plan, but the over-arching purpose is to ensure those who rely on employer-provided insurance are covered for an extended period of time should their circumstances change—and with the pandemic, this has been happening at an alarmingly high rate through layoffs and furloughs.
Continuation allows employers to continue group life coverage for employees who no longer meet eligibility requirements because of layoff, leave of absence, or disability-related causes for a certain period of time. Typically this is between one to three months and premiums must continue to be paid during this period. Continuation of coverage also ensures the reinstatement of benefits without requiring a new Eligibility Waiting Period or Evidence of Insurability (EOI) for employees who were laid off, took a leave of absence, or disabled, especially due to COVID-19.
If employees don’t return to work by the end of the continuation period, group life insurance allows employees to convert their coverage to an individual life insurance policy and pay their premium directly to the insurance company to eliminate any gaps in coverage.
Encourage employees to enroll
For all the above reasons, employers need to educate their employees on why life insurance is a smart investment and clearly communicate the policies and benefits included in their group plan to their employees. Life insurance is an important part of an employee’s overall financial wellness strategy, and it is employers’ responsibility to provide them with all the necessary resources when choosing their coverage.
As we continue enduring these uncertain times, employers need to remind employees of the importance of protecting themselves and family members from unexpected loss. Information about the value of group life insurance should be included in welcome communications to new employees and shared with all employees annually during enrollment.
According to the 2018 Insurance Barometer Study, 61% of respondents stated that they have not yet purchased life insurance or have not purchased more of it because they have other financial priorities. However, the cost of group life insurance is usually less than purchasing an individual plan and well worth the peace of mind and security offered to employees and their families during the pandemic and beyond.
Stability for all
Offering comprehensive life insurance plans, and effectively and regularly communicating the benefits of these plans to employees, not only provides a competitive edge to an employment offer to attract talent, but also shows employees that you care about the financial wellbeing of them and their family—which goes a long way, especially right now. In turn, employees will feel an increased sense of loyalty to the company knowing that they were provided resources to ensure their family is taken care of should something happen to them.
As we near the beginning of open enrollment in November and have witnessed the devastating impact of this pandemic, now is the time to educate employees on the value of life insurance, walk them through the benefits and selection of coverage that’s right for them, and encourage them to enroll as soon as possible.
Greg Poulakos is president of disability, absence, life and supplemental health at Anthem Blue Cross and Blue Shield.
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