Importance of Group Life Insurance for a Business
Group life insurance, as the name implies, is a plan designed to offer life insurance cover to a group of individuals as opposed to a single individual or a family. It is suitable for the needs of societies, businesses, and associations to offer life insurance coverage for their members.
1In the case of businesses or companies, the premiums for the group life insurance can be wholly paid by the employer or partly paid by the employer and partly by the employee. It is extremely beneficial for both parties, but it is pertinent to note that an employee is only covered under the group life insurance policy as long as they are employed with the company.
Why Every Business May Consider Buying a Group Life Insurance for its Employees (H2) There are several reasons that a business may consider buying a group insurance policy for employees. Read on below to learn the benefits of group insurance for business.
1. Financial Protection for Employee’s Dependents:
Financial safety and protection are most individuals’ primary concern. In addition to that, if an individual has a family, they are doubly concerned about maintaining their financial security. With group life insurance, businesses can ensure financial assistance and independence to the nominees of the concerned employee, in the event of his or her death.
2. Higher Productivity:
When employees are not constantly worried about making ends meet while also securing their family’s financial protection, their stress levels tend to be lower, and they are able to work better. Opting for a group life insurance policy may result in higher productivity from employees.
3. Attract Better Talent, Reduce Employee Attrition:
Employee attrition is a key concern for many businesses as talented employees may leave companies for a range of reasons. While employees may leave in order to seek better opportunities, it does become difficult for a business to replace their talented employees. A group insurance policy for employees may be one of the reasons for employers to retain existing talent.
4. Enable Savings for Employees:
By paying for a group insurance policy for employees, a company can ensure that employees may not need to worry about getting life insurance policies for themselves. This way, employees will be able to save more and will be happier working for the company for longer durations.
5. Benefits on Taxation:
There are certain taxation benefits toward availing group insurance for business as well. The amount spent towards availing this policy will be considered as a business expense under the Income Tax Act, 1961, while calculating the taxable income thereby reducing the tax liability. Through such measures, companies can actually save on taxation.
Further Key Takeaways – An Illustration
For Bansal Brothers Limited, one of the worst corporate nightmares was coming to life. Their organisation had turned into a “ladder organisation” where employees just joined to gain experience and having done so, moved to organisations with better perks,benefits, and opportunities.
While the overall industry’s average employment tenure for mid and junior-level executives was 6 years, their company was seeing an average employment tenure at that level of only 3.5 years. Not only was their internal talent pool reducing, but senior employees were also forced to spend more hours training the new hires, which was severely denting their and the company’s overall productivity.
As the management turned to the Human Resources department for answers, the HR team conducted enquiries within and outside the company. They were surprised to find that nearly all of their competitor companies were offering insurance cover to employees, which was acting as an incentive for the employees deserting Bansal Brothers Limited. Despite offering the same compensation package as other companies, Bansal Brothers Limited was facing a dearth of talent due to not offering insurance to their employees.
To counter this situation, Bansal Brothers Limited decided to opt for a group life insurance policy for their employees from a prominent insurer. Not only did more people begin joining the organisation, but the existing talent was also happier to be part of the growing team. While the company’s expenses did rise in the form of premium costs towards the group life insurance, they were able to cut down significantly on the costs of attrition and training. Thus, the group insurance policy turned out to be a valuable cost-saving tool at the end of the day.
Group insurance for businesses, as noted above, can be beneficial for them for a lot of reasons. Offering group life insurance can often be a game changer in most industries as employees do genuinely wish to work harder for companies that put them first. Additionally, some group life insurance plans for business also has options for adding add-on riders to the existing policy, which means employees receive coverage for a range of situations and events.
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