How Small Group Life Insurance Can Work for Small Businesses

As a small business owner, you handle many responsibilities, and taking care of your team is one of the most important. Life insurance for small businesses ensures that your employees have genuine protection and peace of mind.

A life insurance policy provides employees' families with financial security in case of the unexpected. It's a simple benefit with lasting impact. Group life insurance for small businesses can strengthen your employee retention strategy. In this small business insurance guide, we'll break down the types of life insurance plans available and how to choose the right fit for your business.

Why Life Insurance is Important for Small Business Owners

Life is unpredictable, and things can change in an instant. That's why life insurance for small businesses is important. Offering life insurance for your employees or securing coverage for yourself is vital to strengthening and protecting your business. Even a small life insurance policy can go a long way.

Life insurance helps employees feel supported and reduces stress about their families' future. For employers, offering life insurance as part of your benefits package can set you apart in a competitive job market and enhance your employee retention efforts.

Types of Life Insurance Plans for Small Businesses

Not all life insurance plans are the same. The best choice for your business depends on your goals, budget, team size, and the level of coverage you want to provide. Here are the most common types to consider:

• Group Life Insurance:Group life insurance for small businesses is the most common option. You can offer a flat amount of coverage (such as $50,000) or base it on the employee's salary, providing coverage equal to one or two times their annual salary. It's typically affordable and easy to set up. Additionally, a medical exam is usually not required.

• Voluntary Life Insurance:Employees can buy additional coverage beyond the group policy, usually at a lower rate than they'd find on their own. Premiums are deducted from their paycheck, so you're not responsible for the additional cost.

• Term Life Insurance:This insurance policy offers coverage for a specified period, typically ranging from 10 to 30 years. It's typically less expensive than permanent plans and ideal for employees seeking protection during key life stages, such as paying off a mortgage or raising children.

Benefits of Life Insurance for Employees and Employers

Life insurance is an employee benefit that shows you're invested in your team's well-being, both on and off the clock. For many employees, such support is out of reach without access to a workplace policy.

For employers, life insurance adds depth to your benefits package without requiring a substantial financial investment. Creating an inclusive benefits package for the workforce means offering flexible options, such as healthcare and life insurance, to meet the diverse needs of all employees.

How to Choose the Right Life Insurance Plan for Your Business

Selecting the right life insurance for small businesses comes down to aligning your coverage with your team's needs. Make sure to consider your business goals and budget. Here's how to choose a plan that fits your company:

1. Know Your Team

Consider the age range and financial priorities of your employees. A one-size-fits-all plan may fall short for some employees. Some employees may prefer a basic life insurance policy with minimal coverage, while others might want the option to add extra coverage as needed.

2. Decide What You Want to Offer

Are you covering the full cost of a group life insurance policy? Do you want to provide access to voluntary life insurance through payroll deductions? Consider your budget and how it fits into your overall benefits strategy.

3. Pay Attention to Portability and Policy Limits

Some life insurance policies reduce coverage after a certain age or don't allow employees to keep their policy when they leave the company. These details can influence how valuable the benefit feels.

4. Get Professional Guidance

Talk to a broker or benefits advisor who specializes in small business benefits. Professional guidance helps you navigate your options without overcomplicating things or overspending.

Common Faults When Choosing Life Insurance Plans

It's easy to overlook important details when adding life insurance to your benefits package. A misstep can result in frustrated employees or coverage that falls short when it's most needed. Understanding the most common mistakes upfront allows you to choose a plan that fits your business needs better. Here are a few common mistakes:

• Focusing Only on Price:Choosing the cheapest plan may feel budget-friendly, but is it truly a good value for your team? Some low-cost options have restrictive coverage limits or fewer benefits. Keep in mind that a low-cost plan doesn't always mean it's a bad choice, but it's important to review the details carefully.

• Ignoring Employee Demographics:A plan that works for a team of single 20-somethings may not be suitable for employees with families or older dependents. Understanding your workforce helps you choose coverage that actually meets their needs.

• Overlooking Policy Limitations:Neglecting policy limitations can leave your employees underinsured at critical times. As an employer, it's important to understand these limitations and ensure your coverage fully supports your team in the event of an emergency.

• Offering One Rigid Option:Not every employee will want the same coverage. Adding voluntary life insurance as a supplement can meet different needs without increasing your costs.

• Skipping Expert Advice:Life insurance can be complex. A broker experienced in life insurance for small businesses can spot hidden gaps and customize a plan that evolves alongside your company.

The Importance of Life Insurance for Business Protection

Life insurance helps your company stand out in a competitive talent pool and provides your team with confidence in their future. With Justworks PEO, you can get access to life insurance for small businesses, along with health and dental insurance. You can also get expert help to choose the best plan for your business.

Ready to give your team some added security and help your company stand out? Get started with Justworks today.