Life insurance for employees is a type of group life insurance for entrepreneurs and employees of a company. It aims to protect the organization’s human capital, employees and is one of the main benefits offered by companies.
Insurance adds a lot of value when a professional chooses to be part of an organization, because it ensures that the person and his family are financially protected, in case something happens and interrupts life or incapacitates the worker to continue exercising his functions.
Why hire Life Insurance for employees?
For an employee to feel satisfied in their work environment, it is necessary that they feel good and safe. For that, it is necessary that the place is comfortable, pleasant and conducive to the execution of its tasks. However, more than providing a favorable environment, it is essential that the worker feels supported by the company.
It is essential to develop the valuation of the company’s human capital. Life insurance for employees should not be offered alone, because when accompanied by other benefits, such as health and pension plans, they are usually better viewed by employees.
The benefit packages have main role in this task. Through them, a corporation is able to keep its team more productive and motivated and thus be able to increase its revenue and expand its business. Life insurance is essential to put together a complete package and a differentiator so that the employee does not consider looking for other work options.
Because of its importance, companies are increasingly incorporating life insurance for employees into their benefits package. This can happen due to the choice of the organization itself or because of collective bargaining agreements or conventions. In some cases, it is mandatory and ensured by union laws or rules, so it must be part of the human resources policy.
Life insurance for employees can cover both employees, partners, executives, interns and outsourced workers. Therefore, it is necessary that the company is aware of the matter and understands all the advantages that this benefit can bring to the business.
How does life insurance for employees work?
HR must carefully analyze all requirements when implementing life insurance that the company will offer its employees so that this benefit can meet the real needs of the activity performed by them, not turning into a setback when it is actually triggered.
Insurance companies have different types of coverage for business insurance, with differences between them. It is possible to hire basic coverage for cases of death, disability due to illness or accident or others that cover serious illnesses or medical expenses, daily expenses due to hospitalization or disability, among others.
Therefore, in order not to perform a wrong contract, the company must know the needs of its employees and understand what types of risks they are really exposed to. Only in this way is it possible to select the appropriate life insurance for employees.
It is the HR’s responsibility to look for a specialist insurance broker, to assist in the search for the best options and, thus, assist him in this decision. The benefit can go well beyond the well-known indemnity received by the employee’s dependents in the event of death. A complete package offered by insurers may include:
- Emergency assistance: essential for employees who travel nationally or internationally for work.
- Medical and dental expenses: can be used in case of accidents with the insured.
- Early life premium: in situations where the employee develops chronic or terminal illnesses, it is possible to anticipate the amount of the indemnity while still alive.
- Temporary disability due to accident: when the employee suffers an accident and is temporarily away from work, he / she may receive a daily income.
- Funeral assistance: this service assists the employee’s family with bureaucratic issues and funeral costs in the event of death.
When HR is looking for possible options for granting this benefit, it is necessary to determine which employees will receive it and what type of coverage will be offered. After making these decisions, it is necessary to look for an insurance company that can guarantee that the chosen plan is well managed.
What are the benefits of insurance?
Corporate life insurance has several advantages, both for the company and for its employees. It offers greater tranquility and confidence to employees and their families, which directly favors the company, which now has more productive employees.
In addition, it provides benefits for several reasons, such as:
- It can be considered a very strong motivational factor for employees and their families, who can enjoy a social benefit;
- Assists in employee retention and lower turnover, which influences the quality of service and the reduction of expenses with dismissals and new hires;
- Anticipates and prevents problems, reducing financial costs for the company;
- It is a differential benefit for the company to stay ahead of its competitors in the job market;
- It guarantees tax advantages for the payment of the corporation’s income tax.
Which employees will receive insurance?
This is an essential decision to plan the details of the benefit. HR must know whether it will be possible to offer life insurance to everyone or just to a specific group.
Some insurers do not cover small groups, such as children under ten, but they also offer better payment methods as the number of employees covered increases.
In addition to the financial issue, HR must consider factors such as gender, average age of employees, salaries and occupations to make the decision.
However, other factors are still decisive. In addition to considering who will be covered by life insurance, it is important to take into account the conditions of the employee’s contract. The factors may vary, such as the term, capital insured, age and others. Thus, situations of disability , accidents or death, in which the insured or the family receives coverage must also be defined through the contract.
Another important point in the decision is the value of the insurance. It is not always the same, all employees may be entitled to the same amount or the company may divide the contracted capital among the number of people. However, organizations often base the value on each employee’s annual salary.
Collective life insurance plan for employees
For collective packages, benefit terms are usually easy to manage for HR. The insurer provides a form for the company to enroll its employees, which must have a copy for each employee who receives the insurance.
This plan typically covers the employee for as long as he or she works at the company. When you leave your job, you lose the benefit, but in some cases, it is possible to convert business life insurance into individual policy.
This modality follows the financial distribution system, that is, the provisions are formed by the group of policyholders of a company. Thus, all the resources paid by the insurer, in a given period of time, are intended to settle expenses and necessary indemnities that happen during that same period of time.
For this reason, it is essential that the contract established between the corporation and the insurer be extremely clear as to the employees’ compensation situations. Each employee hired by the company becomes insured and enters an existing group life insurance policy, through a membership proposal.
What is the difference between individual and business insurance?
The main difference between the two types of life insurance for employees is the way in which it is taken out.
When the service is individual, there is the possibility of covering anyone between the ages of 18 and 65 who wants a financial guarantee for their dependents. In this case, the questions of payment, duration and services offered are chosen exclusively by the insured.
Meanwhile, the collective packages are contracted by a company to be offered to its employees. In this situation, the company itself is responsible for determining the contract services, including payment, duration and situations covered.
Thus, the employee benefits from the services defined by his company. The employee can include his family and / or dependents in this modality, however it is not possible to change the characteristics already established.
In collective insurance there is no possibility of isolated negotiations. For this reason, many employees choose to take out individual life insurance, in addition to what is already offered at work. In such cases, it is up to him to assess whether the indemnity covered by his company’s insurance will be sufficient to support his family members and dependents in the event of disability or death.
Payment of life insurance for employees
The payment of life insurance can be made in 3 ways:
- “Fully contributory” plan: in which the insured employees are responsible for the full cost of the plan, but at a reduced price, as it is a collective service;
- “Non-contributory” plan: insurance is part of the benefits of the employees’ position, so the company is responsible for making the full payment for the service;
- “Contributory” plan: the employee pays part of the insurance with the company and the amount is deducted from the payroll.
Every new employee of the company must know the types of life insurance offered, their payment methods and coverage. HR must be prepared to inform anyone about the coverage of this service.