Business owners have a lot of life insurance options for their company, including both term and permanent life insurance. One of the most beneficial insurance choices for small business owners in Canada is group life insurance.
With group life insurance, you can help ensure the financial well-being of yourself, your company, and your employees and stakeholders.
Employees are the lifeblood of your business and livelihood. They are your company’s greatest asset. Here’s how you can protect them.
What Is Group Life Insurance?
Group life insurance is an insurance policy that covers multiple people and is most commonly used to cover a company, big or small.
An entity or a business owner purchases a life insurance contract and then extends the policy to cover an entire group of people, typically employees. Group life insurance is offered by businesses of all sizes.
Small business owners often offer this form of life insurance to employees at no cost, while sometimes giving employees the option of additional supplemental insurance.
Businesses can offer group life insurance as part of a complete employee benefits package. Often, group life insurance and supplemental insurance offered through an employer are far cheaper for employees than purchasing life insurance in a different form.
An employee of a small business usually retains group life insurance benefits until they retire or leave employment. Under group life insurance, a small business owner technically keeps the master policy contract.
How does Group Life Insurance Work?
Group life insurance usually falls under the category of term life insurance and is offered to employees upon joining a company or working with a business for a set period of time, usually 30 or 60 days.
Small business owners and employees have the ability to adjust their individual insurance under group life insurance to account for specific life events, such as marriage or childbirth.
Think of group life insurance as a financial safety net for your business, yourself and your employees, and their families. Whoever owns the master contract pays an insurance premium for themselves and the employees they want to cover.
Group life insurance policies are typically renewed on a yearly basis, and those under term life insurance within a small business chose individual beneficiaries for insurance benefits.
The size required for group life insurance varies. It can be as low as two people, for example, you as the business owner and a key business partner or employee. There are sometimes employee size requirements related to tax purposes.
Why is Group Life Insurance Important For Small Business Owners?
Group life insurance provides clear peace of mind and financial support for yourself, your business partners, and those who make your business run successfully.
Just 42% of Canadians have fewer than six months of living expenses saved up, according to one study. Offering group life insurance helps ease the financial challenges many employees and their families face.
Group life insurance has become a common and especially popular benefit for employees and helps small business owners remain competitive with other businesses.
Offering a stellar benefits package that includes group life insurance makes your business attractive to a workforce who may choose a job over another based on insurance offerings.
Having your small business offer group life insurance conveys that the financial and emotional health of your employees is a top priority.
Benefits of Group Life Insurance For Small Business Owners
In addition to protecting the well-being of your staff — and attracting new employees — group life insurance has several other benefits for small business owners.
Group life insurance isn’t just less expensive for employees — it’s less expensive for you as a small business owner compared to purchasing individual term life insurance policies.
You can also have the option of paying the full cost for employees, offering optional coverage, or even paying for a portion of the coverage and allowing employees to cover the rest. It all depends on what you prefer and what your budget allows.
If you own your small business with one or more people, there is also an option for owners to purchase life insurance coverage on each other. Such cross-purchasing allows surviving owners to take advantage of a death benefit by purchasing the share of an owner who has died.
Group life insurance also gives you the option of insuring a few key employees, usually those who are extremely essential to the success of your small business. Within group life insurance, small business owners can take out a policy on a key employee to protect the livelihood of the business should that key employee unexpectedly die.
What To Think About When You’re Thinking About Group Life Insurance
Before purchasing a group lie insurance policy, small business owners should take the time to accurately and completely assess their business needs and the needs of their employees.
Determine what is needed and what is not. Review your ability to pay for group life insurance or figure out if there are options within group life insurance policies that will still protect your business at less cost.
It pays to do some research. Look into different insurance companies and the range of what they offer as part of their group life insurance policies. Think about the insurance company’s overall reputation and whether they have experience working with small businesses like yours.
Compare the coverage costs between several different insurance providers and see if business associates or friends have any recommendations for insurance companies that have worked well for them.
And Consult an Insurance Professional
There’s a lot of research about group life insurance that you can do on your own. But having assistance from a professional who specializes in life insurance and investment is key.
Sim Gakhar is an insurance agent and investments advisor that can help you navigate through group lie insurance choices to pinpoint the policy that will work best for your company and your financial goals.
Based in Markham, Gakhar has helped clients across Ontario, Canada, find life insurance that is the best fit for their small business and their employees.
All you need to do is give Gakhar a call (647-889-7290) or email ([email protected]) to start the path to smart insurance planning for your small business today.
Essential Planning for Financial Security
Helping business owners and self employed professionals grow retained earnings tax-free, pass more wealth to the next generation, and protect their biggest asset – themselves, the key person of the business.