Which Type of Life Insurance is Best for Your Employees?

American consumers are constantly told they need life insurance. And a whopping 70% of them agree that having life coverage is important. However, only about half of adults actually have some form of life insurance.¹ The result is a need gap.

By offering life insurance to employees, you are filling that need gap with coverage at reduced group rates that are not typically available on individual policies. Also, offering life insurance as part of your benefits package is an important element of a successful recruitment strategy.

But what type of life insurance is best? It depends on your employees' needs and preferences. Here is a quick overview of coverage types.

Term Life Insurance

As the name indicates, this type of life insurance policy provides coverage for a fixed amount of time. It pays beneficiaries a lump-sum death benefit if the insured dies during the specified term of the policy. The benefit is designed to stay level from the start of the policy to the finish, but it may change if the employee chooses. Common terms include 10, 20 or 30 years.

Term life insurance is a good choice if your employees seek affordability. If they want assurance that premium rates do not go up and the ability to choose their coverage amount, this might be a viable option.

Universal Life Insurance

With universal life insurance, employees receive lifetime coverage that passes a death benefit to beneficiaries when the employee dies. It also earns tax-advantaged interest, allowing them to continue building cash value over time as long as premiums continue to be paid. Coverage lasts until death or policy maturity if they live to a specific age (determined by the policy terms).

One of the most popular features of universal life insurance is the option to adjust premium amounts and coverage levels (subject to some underwriting limitations).

For this reason, universal life insurance is a good choice if your employees seek flexibility. Life is unpredictable and many employees appreciate being able to change plan options and payment amounts depending on what's happening in their lives. They also appreciate the opportunity for their policy to grow in value, although the cash value is subject to interest rates and not set in stone when the policy is issued (unlike whole life insurance).

Whole Life Insurance

Like universal coverage, whole life insurance is a permanent policy that lasts until death, when the death benefit is passed to the employee's beneficiaries. Also, it builds tax-advantaged cash value over time.

Where it differs is in its guarantees. Whole life insurance offers a guaranteed death benefit that will never decrease as long as premiums are paid. No other type of life insurance provides that level of security.

Whole life insurance is a good choice if your employees seek stability. Once the policy's premiums and benefit details are determined, rates are guaranteed for the life of the policy. It's a bit like the crock pot of life insurance—set it and forget it.

Life Insurance from Allstate Benefits

The Allstate Benefits portfolio of life insurance products has coverage solutions to suit your workforce no matter their needs or preferences.

Our policies also allow you to tailor coverage selections with optional riders that are designed to enhance benefits. And benefit payments have no restrictions, meaning they may be used for final expenses, daily living costs and any other needs.

Learn more about our selection of life insurance products here.

Speak to an agent about your employee benefits package or click here for a quote.

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