Should You Provide Life Insurance to Your Employees?

Offering benefits to your staff can be an important tool in employee retention as well as attracting new talent, so it’s vital that you choose what you offer carefully. Providing life insurance will need to be optional in order to take individual situations into account, but it can be very well received by those who choose to take it on.

Here, we take a look at why providing life insurance for your employees could be a good thing and examine the best ways to make it work.

Why offer life insurance?

Life insurance might seem like an unusual employee perk when compared to free coffee or staff discounts, but it can be a significant one. Aside from any practical reasons, it sends a message to your employees that you care about their life and their wellbeing. Having ridden the storm of a global pandemic, this is more pertinent than ever, and might be valued more by your staff now than in the past.

Life insurance is a financial cost that means only around a third of workers hold personal life cover, and this is usually just to cover a mortgage. It’s one on the many things taken from our pay packet without us ever feeling the benefit of it and so many decide it’s an expense they can live without.

When an employer takes on this burden instead, you make a contribution to their financial situation that they will appreciate immediately. For many, it will have more meaning than other perks, such as a company car or share options, thanks to the security that it offers to the worker’s family.

The modern population is an ageing population

We’re all aware that we’re living in an ageing population, with the Office for National Statistics (ONS) predicting that more than 24% of people in the UK will be 65 or over by the time we reach 2042, and when you compare this to the average life expectancy in USA which is around 79 years of age, employers may want to consider protecting their employees.

Until recently, life expectancy was over 80 for both men and women, and although it has taken a slight dip as the full force of COVID-19 is felt, this is likely to go back up again. This ageing workforce, particularly those who continue to work past pensionable age, brings greater risk of becoming seriously ill or dying whilst in employment.

In addition to this, the pandemic has made younger people aware of their own mortality. It has thrown into sharp focus the fact that none of us live forever, and so younger portions of the population are looking at what will happen to their loved ones should tragedy strike.

We’re all retiring later

Not only are we living for longer, but we’re also working for much longer. With the average retirement age increasing around the world, employers should also factor in the average time in which an employee stays within their job, which is around 4-5 years.

The cost to your business

Whilst not every employee will take up the offer of life insurance, you should forecast on the assumption that they will. This might seem costly, but group risk policies are now available that provide a more cost-effective way to do this. It allows you to protect a group of employees under one umbrella, but it’s important to understand the implications of doing this.

Typically, the more employees you cover, the lower cost per employee, so offering it company-wide can be better than just selecting a few workers for the perk. Also, the premiums that the business pays for life insurance cover are usually a tax-deductible business expense. The cost of the premiums is determined by a number of factors which can include the age of the employees, the industry that you work within and the level of cover that you want to offer.