Group Life Insurance Bloomfield Hills Employees Actually Understand
Most employers offer life insurance because it is low cost and people expect it. Then open enrollment comes, and someone asks a hard question. Can I keep this if I leave? Why does my pay stub show extra income? Good group life insurance Bloomfield Hills companies offer should come with clear answers to both.
What We Cover, Section by Section
Life Insurance
Life insurance looks simple on paper. It still has more moving parts than most people expect. Group term life is the base plan.
Group Long-Term Care Insurance
Long-term care means help with daily living, like bathing, dressing or eating. It can happen at home, in assisted living or in a nursing home. Illustrate a coverage gap with our free life insurance needs calculator.
Executive Benefits
Owners and senior leaders often outgrow the standard group plan. Group life and disability plans usually have caps. For a high earner, the group plan may cover only a small part of their pay. Convert a rate per $1,000 into a paycheck cost with our free supplemental life insurance cost calculator.
We are CFH Insurance Consultants, an independent employee benefits consulting firm on Woodward Avenue. We have been in business since 2007, and no carrier owns us. We help employers in Bloomfield Hills, Birmingham, Troy, Southfield and across the whole state of Michigan set up life coverage their people understand. You can test your own figures with our group life insurance premium calculator.
Life Insurance
Life insurance looks simple on paper. It still has more moving parts than most people expect.
Group term life is the base plan. The employer pays for it. It is often a flat amount, like $25,000, or a multiple of salary. “Term” means it covers people while they work for you. It does not build cash value.
Voluntary life sits on top. Employees choose more coverage for themselves, a spouse or their children. They pay for it through payroll. Getting coverage through a group is often easier than buying a personal policy.
Guaranteed issue is the amount a person can get with no health questions. Above that amount, the carrier may ask for a health form. That form is called evidence of insurability. New hires should know their sign-up window, because missing it can mean health questions later.
Portability and conversion matter when someone leaves. Portability lets a person keep group term coverage after the job ends, often at group rates. Conversion turns it into an individual policy, often at a higher price. Both have short deadlines.
As your group life insurance Bloomfield Hills broker, we compare carriers, read the plan wording and help keep you ERISA compliant. Open enrollment is in the fall, and most January 1 renewals arrive in October and November. That is a good time to check benefit amounts and remind employees to update their beneficiaries. You can test your own figures with our dependent coverage cost calculator.
Why does group life over $50,000 show up on an employee’s W-2?
The IRS treats employer-paid group term life above $50,000 as taxable to the employee. The value of that extra coverage is called imputed income. It is added to wages, even though no cash changes hands, and payroll has to report it.
This catches people off guard. If your plan pays two times salary, anyone earning more than $25,000 a year crosses the line. Some employers keep the employer-paid benefit at $50,000. Then they let people buy more through voluntary life with after-tax pay, which generally does not create imputed income. We walk through both setups with you and your payroll team before open enrollment.
Group Long-Term Care Insurance
Long-term care means help with daily living, like bathing, dressing or eating. It can happen at home, in assisted living or in a nursing home. Regular health insurance and Medicare usually do not pay for long stretches of this kind of care.
Group long-term care insurance lets employees buy this coverage through work. It is usually voluntary, so employees pay the premium. Some plans let spouses and even parents apply too. Carrier choices can be narrower than for life or disability coverage.
Some newer products pair life insurance with a long-term care benefit. If an employee needs care, part of the death benefit can be paid out early. We lay out the options side by side, with the price and the fine print, so you can decide if it belongs next to the group life insurance Bloomfield Hills employees already have.
More on Group Long-Term Care Insurance →
Executive Benefits
Owners and senior leaders often outgrow the standard group plan. Group life and disability plans usually have caps. For a high earner, the group plan may cover only a small part of their pay. The group life insurance Bloomfield Hills executives get through work may stop well short of what their family would need.
Executive benefits fill that gap. Common pieces include:
- Supplemental life and disability coverage for key leaders, added on top of the group plan
- Key person coverage, which pays the business if a leader it depends on dies or becomes disabled
- Nonqualified deferred compensation questions. This is a plan that lets an executive put off part of their pay until later.
Deferred compensation raises tax and legal questions. Our clients get access to CPAs and ERISA attorneys through the firm, so those questions go to the right expert. We coordinate the insurance side and keep the whole picture in one place.
Who’s the best group life insurance broker near me?
Look for three things. The first is independence. A broker that no carrier owns can quote several carriers and tell you plainly how they compare.
The second is a team, not one person. For proper coverage of an account we work in teams of 5: an account executive, an account manager, a plan analyst, customer service and IT. If one person is out, your questions still get answered.
The third is someone close by. Our office is at 41000 Woodward Avenue, Suite 350 East, near Birmingham and West Bloomfield. We are a member of the Birmingham Bloomfield Chamber. When you meet any broker, ask how they handle portability paperwork and the $50,000 tax rule. The answer tells you a lot.
What do I do if an employee is leaving and wants to keep their life insurance?
Act quickly. Portability and conversion windows are short, often just weeks. Here is a simple checklist:
- Check your plan certificate for the portability and conversion rules.
- Give the employee the carrier forms and the deadline in writing before their last day.
- Tell them the price may change, and that a converted policy can cost more.
- Keep a copy of what you sent.
If you are not sure what your plan allows, call us. We can read the certificate with you and get the right forms from the carrier. Group life insurance Bloomfield Hills employers offer only helps a departing employee if they hear about their options in time.
Talk to Us About Group Life Insurance Bloomfield Hills Employers Can Rely On
Send us your renewal or book a 30-minute call. We will look at your life, long-term care and executive coverage and tell you plainly what we see. Visit us at 41000 Woodward Avenue, Suite 350 East, Bloomfield Hills, MI 48304, or call 248.370.8853. We work with employers in Oakland County, Metro Detroit and across Michigan.
Unhappy With Your Current Broker?
Switching to CFH takes one signed letter. Your carrier, plan, ID cards and payroll deductions stay the same.
What Basic Group Term Life Actually Is
Basic life is the benefit most employees assume they understand. The details that decide whether it works at claim time sit in the certificate, so we start there.
Term Coverage, Not Cash Value
Group basic life is term insurance. It pays a death benefit while the employee is covered and while premiums are paid. It does not build cash value, and coverage ends when employment or eligibility ends unless the employee uses a continuation right.
A Master Policy Held by the Employer
The employer holds a group master policy, and each covered employee receives a certificate or summary that describes the coverage. The certificate, not the brochure, controls what is payable. We read both before we compare any quote. Ask for the full certificate early, since riders and limits often sit in its fine print.
Eligibility and Waiting Periods
Plans define who is eligible, usually by class, hours worked per week and a waiting period after hire. Written eligibility rules keep coverage consistent from one employee to the next and protect the plan if a claim is questioned. Applying the same definitions to every new hire helps avoid disputes later.
Who Is Covered and When
Coverage generally starts on the first day of the month after the waiting period, provided the employee is actively at work. The actively at work condition can delay the start for someone on leave, so we confirm how each carrier applies it.
What Happens at a Claim
The beneficiary on file submits a claim with a certified death certificate and the carrier’s forms. The carrier reviews the claim against the certificate and pays the named beneficiary. We help the employer and the family through the paperwork. Keeping beneficiary designations current helps this step move faster.
Why It Pairs With Other Benefits
Basic life usually sits alongside AD&D, disability and voluntary life. Reviewed together, the pieces show the true income protection an employee has. See our pages on group disability and supplemental life.
Flat Amount or Multiple of Salary, and Where the Cap Sits
Design choices drive both the cost and the value of the benefit. These are the decisions we put in front of an employer before a plan goes to market.
Flat Amount
A flat benefit gives every eligible employee the same amount, such as $25,000 or $50,000. It is simple to administer and easy to explain. It does not scale with pay, so it can feel thin for higher earners and generous for entry-level roles.
Multiple of Salary
A salary multiple, such as one or two times annual earnings, scales the benefit with pay. Administration is heavier because the amounts change with raises, and the definition of earnings (base pay only, or bonus and commission too) must be written clearly.
The Benefit Maximum
Multiple-of-salary plans carry a maximum so one large salary cannot drive the whole rate. A cap can hold a highly paid employee well below the multiple the brochure suggests, so we show the employer the real result for each salary band.
Classes of Employees
An employer can set different benefits for different classes, such as owners, managers and staff, as long as the classes are defined by job-related criteria and the plan stays within the nondiscrimination rules covered further down this page. Document the class definitions in writing so they can be explained to employees and to the carrier.
Age Reductions
Many group plans reduce the benefit as the employee ages, commonly in steps beginning around age 65, according to the carrier’s schedule. The reduction applies to the original amount, not the last reduced amount. Ask for the exact schedule in writing.
Rounding and Minimums
Certificates often round benefits up to the next $1,000 or $5,000 and set a minimum amount. Small details like these affect rates and employee communications, so we check them in the proposal rather than assume. Employees often ask about this, so a short plain explanation in enrollment materials helps.
Employer-Paid Basic Life Versus Voluntary Life
Most employers fund a base amount and let employees buy more. Who pays for which layer affects participation, tax treatment and plan documents.
Employer-Paid Base Layer
The employer pays the full premium for a base benefit offered to every eligible employee. Because it is automatic, it reaches the whole workforce, including people who would never seek out life insurance on their own. Because it is automatic, the base layer gives every family a floor of protection without anyone having to opt in.
Voluntary Buy-Up
Employees may purchase additional coverage at their own cost through payroll deduction. Voluntary life lets people match coverage to their family situation without adding to the employer’s budget. See supplemental life and disability.
Contributory Versus Noncontributory
A noncontributory plan is paid entirely by the employer. A contributory plan asks employees to share the cost. Carriers often require higher participation in contributory plans, and the choice also changes the tax analysis. Employers weigh the cost split against their participation goals and ask a tax adviser how it affects reporting.
Why the Base Amount Matters
A base amount over $50,000 triggers the imputed income rule explained below. Many employers set the base at or just under $50,000 for that reason, or accept the tax reporting in exchange for a richer benefit. A tax adviser can confirm how the imputed income rules apply to a specific plan design.
Coordinating With Other Offers
Voluntary and ancillary offers should be designed together so employees see one clear menu. Our page on voluntary and ancillary benefits explains how we lay out the full set.
Document the Funding Choice
Whether the employer pays all, part or none of the cost should be written into the plan document and the enrollment materials. A clear record avoids disputes and supports the plan’s compliance file. Keep that record with the plan file so a future administrator can see how the decision was made.
Guarantee Issue and Evidence of Insurability
These two terms decide who can get coverage without health questions and who cannot. They are among the most misunderstood parts of a group life plan.
What Guarantee Issue Means
Guarantee issue is an amount of coverage a carrier approves without health questions. For the employer-paid base benefit it usually applies to every eligible employee who is actively at work when coverage begins. Confirm the exact amount and the active-work requirement in each carrier’s proposal.
What Evidence of Insurability Means
Evidence of insurability is the health information a carrier asks for before approving coverage above the guarantee issue amount, or for someone who applies late. It may include a health questionnaire and sometimes medical records. Late applicants and larger elections are where this step can slow coverage down.
The Initial Enrollment Window
Guarantee issue typically applies when an employee enrolls during the first eligibility window, commonly 31 days. Miss the window and the employee may need to prove insurability. Confirm the exact window for each carrier. Telling new hires the deadline in writing helps them avoid an unwelcome medical review later.
Late Entrants
An employee who declines coverage and applies later is a late entrant. Carriers generally require evidence of insurability from late entrants, and an approval is not guaranteed. We tell employees this before they decide to wait. A short note in the enrollment packet can prevent this surprise.
Increases and Open Enrollment
Raising a voluntary election at a later open enrollment usually calls for evidence of insurability, even for current participants. Some carriers allow small annual increases without it. Ask what the plan allows. Employees planning a larger election are better off knowing the process before open enrollment begins.
Why Employers Should Care
Guarantee issue limits are a cost lever. A higher limit helps employees but adds risk for the carrier, which can show in rates. We compare the limit alongside the rate, never the rate alone. A rate quote with a very high limit may look attractive, but the limit itself deserves a close look.
Accidental Death and Dismemberment, and What It Excludes
AD&D is often bundled with basic life. It pays in narrower circumstances, and employees should know where the lines are.
What AD&D Pays For
AD&D pays a benefit if an employee dies because of a covered accident, and a percentage of the benefit for covered losses such as limbs, sight, speech or hearing. It is separate from life insurance and usually adds to the life benefit.
The Loss Must Follow the Accident
Carrier materials commonly require the loss to result from the accident, independent of other causes, and to occur within a set period afterward, often 365 days. Death from illness or natural causes falls under life insurance, not AD&D. Employees should know that illness is handled by the life policy instead.
Typical Exclusions
Published AD&D highlights from carriers commonly exclude losses caused by war, suicide or intentional self-injury, committing a felony, voluntary use of drugs or alcohol not taken as directed, and sickness. Exact exclusions vary, so we read each certificate. Share the exclusion list with employees so nothing comes as a surprise at claim time.
Dismemberment Schedules
A schedule assigns a percentage of the AD&D amount to each loss. Loss of one hand or one foot commonly pays half of the amount in carrier examples, and loss of multiple limbs pays the full amount. Confirm the schedule in the certificate.
Optional Add-Ons
Some plans add seat belt, air bag, family support or public transportation benefits. These add cost and should be weighed against how employees actually travel and work. Ask for the add-on amounts in writing. Compare each add-on’s price with the value employees are likely to see before including it.
AD&D Is Not a Substitute
AD&D alone leaves most deaths uncovered, because most deaths are not accidental. We advise against treating it as a replacement for life coverage, and we say so in employee communications. Employees often confuse the two names, so plain wording matters. A short explanation of the difference at enrollment helps them choose the right mix.
Dependent Life Coverage for Spouses and Children
Dependent life is a smaller benefit with its own rules. It is useful for covering final expenses and gives employees a reason to look at the whole package.
Who Counts as a Dependent
The certificate defines eligible spouses and children, including age limits for children. Those definitions may differ from the medical plan, so we compare them and flag mismatches before open enrollment. Spouse rules and child age cutoffs are the usual points to check. Aligning them where the carrier allows reduces confusion for employees.
Typical Benefit Amounts
Employer-paid dependent life is usually a small flat amount, with larger amounts offered on a voluntary basis. Dependent amounts are normally tied to the employee’s own coverage and cannot exceed a stated share of it. Review the amounts against what employees would realistically need, and confirm the cap in the proposal.
Tax Note on Small Amounts
The IRS treats employer-paid group-term coverage on a spouse or dependent as a de minimis benefit when the face amount is $2,000 or less. Larger employer-paid amounts can raise a tax question, so consult your tax adviser.
Underwriting for Dependents
Dependents may face health questions above a guarantee issue amount, and some plans delay coverage if a dependent is hospitalized or confined on the effective date. Read the actively-at-work type language for dependents too. Employees electing dependent coverage should be told about these conditions before they enroll.
Employee Must Be Covered
Dependent coverage generally requires the employee to carry coverage. If the employee leaves or loses coverage, the dependent coverage usually ends at the same time unless a continuation right applies. Tell employees what happens to dependents at separation, and ask the carrier about any continuation or conversion options.
Keeping Eligibility Clean
Coverage for people who are no longer eligible creates claim disputes. Our guide to dependent eligibility verification explains how employers keep their records current.
IRS Section 79 and Imputed Income Above $50,000
Group life is tax-advantaged up to a point. Employers should understand where that point is before they set the base benefit. We are not tax or legal advisers; confirm your situation with your tax professional.
The $50,000 Threshold
Under Internal Revenue Code Section 79, the cost of the first $50,000 of employer-provided group-term life coverage is excluded from an employee’s income. The cost of coverage above $50,000 is generally included in wages.
The Cost Is From an IRS Table
The taxable amount is not the premium the employer pays. It is figured from an IRS uniform premium table (often called Table I) that sets a monthly cost per $1,000 of coverage by five-year age bracket, using the employee’s age on the last day of the tax year.
Employee Payments Reduce It
The amount an employee pays toward the coverage reduces the amount included in income. If the employee pays at least the table cost for the excess coverage, the imputed income can fall to zero.
When It Applies
The rule applies when the employer carries the policy and either pays part of the cost or arranges premiums so some employees subsidize others. IRS guidance describes both tests. Coverage the employee buys outside the employer’s arrangement is outside the rule.
Reporting on the W-2
Taxable cost above $50,000 is reported in Boxes 1, 3 and 5 of Form W-2 and shown in Box 12 with code C, per IRS Publication 15-B. Payroll needs the coverage amount and age data to compute it each year.
Plan Design Response
Some employers cap the base benefit at $50,000 to avoid imputed income. Others accept it for a richer benefit. See also our group health and employee benefits overviews.
How Imputed Income Is Calculated, Step by Step
The numbers below are hypothetical and use the IRS uniform premium table rate for ages 45 through 49 ($0.15 per $1,000 per month) as published in IRS regulations. They illustrate the method, not any specific employee.
Step One: Find the Excess
Suppose a 47-year-old employee has $150,000 of employer-paid group-term life. The coverage over $50,000 is $100,000, which is 100 units of $1,000.
Step Two: Apply the Table Rate
100 units times $0.15 per month is $15 per month, or $180 for a full year. That $180 is the imputed income before any employee payment.
Step Three: Subtract What the Employee Pays
If this hypothetical employee pays $10 per month toward the coverage, that is $120 for the year. The imputed income falls to $60. If the employee pays nothing, the full $180 is included.
Payroll Taxes Apply
Imputed income is subject to Social Security and Medicare taxes, per IRS Publication 15-B. At the combined employee rate of 7.65 percent, $180 produces about $13.77 of employee tax in this hypothetical, with a matching employer share.
Income Tax Withholding
Federal income tax withholding on this amount is optional for the employer under IRS guidance. Employers should adopt one consistent practice and tell employees how it works. Check state rules with your tax adviser.
Why Age Matters
The table rate rises with age, from $0.05 for under 25 to $2.06 for 70 and older. The same $100,000 of excess coverage costs far more in imputed income for a 62-year-old than for a 32-year-old. Payroll should rerun it every year.
The Section 79 Nondiscrimination Rule in Plain Terms
The $50,000 exclusion is only fully available if the plan does not favor key employees. This is a technical area where your tax or legal adviser should confirm the testing.
What the Rule Protects
If a group-term plan is found to favor key employees, the $50,000 exclusion is lost for those key employees. Other employees keep the exclusion, but the key employees may owe tax on more of their coverage. Because this is a tax matter, your CPA or counsel should confirm how it applies to your plan.
Who Is a Key Employee
Section 79 borrows the key employee definition from Section 416(i), which generally covers certain officers and owners and some former employees who were key when they left. Ask your adviser how it applies to your company. Closely held companies in particular should have their adviser review the definition early.
The Eligibility Test
A plan generally must cover at least 70 percent of employees, or meet alternatives such as having at least 85 percent of participants be non-key employees. Certain groups, such as part-time and short-service employees, can be excluded from the count.
The Benefits Test
Every benefit available to key employees must also be available to the other participants. Coverage that bears a uniform relationship to pay, such as a multiple of salary, does not by itself make a plan discriminatory. Plans that vary benefits by class should be reviewed with a tax professional before launch.
Practical Red Flags
An executive-only life benefit, or much richer coverage for owners, is the kind of design that invites testing problems. Executive arrangements can be handled separately, as covered on our supplemental life and disability page.
Document the Testing
Ask your tax professional to review the plan design and keep a record of the result. We flag design choices that could cause trouble, but testing and tax conclusions belong to your CPA or counsel. Revisit that review whenever classes, amounts or eligibility rules change.
Portability, Conversion, and What Happens at Termination or Retirement
Basic life usually ends when employment ends. Portability and conversion are the two ways coverage can continue, and they are not the same thing.
Coverage Ends With Employment
In most group plans the coverage ends on the last day of employment or eligibility, or at the end of that month, depending on the certificate. Employees should be told the date in their separation paperwork. Giving this date in writing avoids confusion about when coverage actually stops.
Conversion Defined
Conversion lets a departing employee apply for an individual policy from the carrier without proving insurability. Michigan law requires conversion rights in group life policies, with a 31-day window after termination, and the certificate describes the details. Employees leaving the company should hear about this option promptly, since the window is short.
Portability Defined
Portability continues group-style term coverage after employment ends, often at group-based rates that may change. It is a carrier feature rather than a legal requirement, and it commonly requires a statement of good health. Ask each carrier for the age limits and the forms before relying on it.
How They Differ
Conversion converts to an individual policy, usually a permanent type, with no health proof and premiums that are higher but level. Portability keeps term coverage with eligibility limits. Carrier examples show both with a 31-day application window. Employees comparing the two should see the cost of each in writing before the deadline.
Retirement
Retirees may lose coverage at retirement, keep a reduced amount, or move to a retiree plan if the employer offers one. Employees nearing retirement should receive this information well in advance. Employers can reduce questions by stating the retiree rule in the plan summary.
Tell People Early
Employees often miss the window because nobody told them. We help employers build a termination checklist that includes life insurance notices. See also COBRA administration, which covers a different set of continuation rights.
Waiver of Premium and Accelerated Death Benefits
These provisions often come with the base plan at no extra charge. They matter most when something goes wrong, so we confirm them before a plan is selected.
Waiver of Premium
If an employee becomes totally disabled before a stated age and stays disabled through a waiting period, the carrier can waive further premiums and keep the life coverage in force. Definitions of disability and proof requirements vary. Ask how the carrier defines total disability before comparing quotes.
Waiting Period and Proof
Carrier examples commonly require disability to continue for months before the waiver begins, with annual proof afterward. Late claims can be denied, so employees should know to notify the carrier promptly when they stop working. A reminder in separation and leave paperwork helps employees act in time.
Accelerated Death Benefit
An accelerated benefit lets a terminally ill employee receive part of the life benefit while living. A carrier example allows up to 75 percent of coverage for a life expectancy of 12 months or less, certified by physicians. Terms differ by carrier.
Effect on the Death Benefit
Any accelerated payment reduces the amount later paid to beneficiaries. NAIC model rules require carriers to disclose this and to warn that the payment may be taxable and may affect eligibility for government benefits. Employees should understand this trade-off before choosing an early payment.
Tax and Benefits Eligibility
Whether an accelerated payment is taxable depends on the facts. Employees should speak to a tax professional before claiming it, and consider how it could affect any means-tested benefits they receive. A tax professional can walk an employee through the decision before any claim is filed.
Other Services
Some carriers include travel assistance, will preparation, grief counseling or beneficiary support. These are not guaranteed features of every plan, so ask for the list and read the exclusions. Treat them as extras, and compare core terms and price first unless the details are in writing.
Beneficiaries, Plan Documents, and the Claims Process
Most claim problems are paperwork problems that could have been fixed years earlier.
Name Primary and Contingent
Every employee should name a primary beneficiary and a contingent beneficiary. Without a valid designation, the carrier typically follows the order in the certificate, which may not match what the employee wanted. Reminding employees to name both at enrollment costs nothing and prevents later problems.
Common Mistakes
Frequent errors include naming a former spouse after a divorce, naming a minor child directly, leaving the form blank, and never updating after a life event. Minors generally cannot receive the funds without a court-supervised arrangement. A reminder at enrollment can catch these errors before they matter.
Keep Designations Current
Prompt each employee to review beneficiaries at every open enrollment and after any marriage, divorce, birth or death. Online enrollment platforms make this easy and create a record. Keeping a dated record of each review also helps if a designation is ever questioned later.
ERISA Status
A group life plan the employer sponsors is generally an employee welfare benefit plan under ERISA. A narrow Department of Labor safe harbor excludes fully employee-paid voluntary programs when the employer only permits promotion and collects payroll deductions. Ask counsel how the rule applies to your arrangement before relying on the safe harbor.
Summary Plan Description
ERISA plans must furnish an SPD to participants within 90 days of becoming covered, according to the Department of Labor. A carrier certificate often serves as part of it but may not satisfy every requirement. Read SPD versus benefits guide.
Claims and Contestability
The beneficiary submits a certified death certificate and the carrier’s claim form. Carriers may review a claim closely if the death occurs soon after coverage starts or involves a late-entrant election. Time limits and suicide clauses vary, so confirm them with the carrier.
How Group Life Rates Are Set
Group life pricing looks simple on a quote and hides several choices that change what you pay over time.
Composite Rates
A composite rate charges one flat rate per $1,000 of volume across the whole group, regardless of age. It is easy to budget but can cost younger groups more than they need to pay. Which approach fits depends on the age mix of the group, so compare both in the proposal.
Age-Banded Rates
Age-banded rates charge by age bracket. They track expected claims more closely and are common for voluntary coverage, where employees see their own rate. Bands usually move every five years. Because rates step up with age, projecting cost for several years gives a clearer picture.
Experience and Volume
Carriers price based on the group’s demographics, salary, benefit amounts, industry, participation and, for larger groups, claim history. Experience-rated groups can see results move with their own claims. Ask the carrier which of these factors drove the quoted rate so you know which ones the employer can influence.
Rate Guarantees
A rate guarantee fixes the rates for a stated period, often one to three years. Ask what the guarantee covers, what happens at the end, and whether adding classes or changing benefits voids it. Get the guarantee terms in writing and compare them across proposals, not only the first-year rate.
Volume Changes
Rates may be reviewed when headcount or covered volume changes by a stated percentage during the guarantee. The trigger is in the contract, so we read it with the employer. Employers with seasonal or fast-changing headcount should pay particular attention to this clause.
Bundling
Some carriers discount life when combined with disability or other lines. A bundle can help, but we check that each line is competitive by itself. We negotiate and compare; we do not guarantee carrier pricing. Bundles are worth considering when each line holds up on its own.
Questions to Ask Every Life Insurance Carrier
This list is the short version of what we put in a carrier request. Use it to compare proposals on equal terms.
Guarantee Issue and Limits
What is the guarantee issue amount, the maximum benefit, and the late entrant rule? Do these apply to the base benefit, voluntary life and dependent coverage separately?
Reductions and Termination
What is the age reduction schedule, and when does coverage end for active, disabled, retired and terminated employees? Get the schedule in writing.
Portability and Conversion
Is portability offered, with what limits and deadline? How does conversion work, and what are the conversion forms and rates? Do the answers differ by state of residence?
Provisions Included
Are waiver of premium, accelerated benefits, AD&D and any services included? Are any of them an extra charge? How are they defined?
Rates and Guarantees
Are rates composite or age-banded? How long are they guaranteed, and what triggers a mid-term change?
Service and Claims
Who handles claims, how long do they typically take, and who can the employer call? Ask for the contact before you need it. Bring us a proposal and we will compare it line by line.
What Employers Ask About Group Life Insurance
Clear answers on group life and AD&D.
How much group life insurance should we provide?
Employers usually offer either a flat amount or a multiple of salary. The right level depends on budget and how the benefit fits with the rest of the package. See our supplemental life guide for voluntary add-ons.
What is imputed income on group life?
Employer-paid group term life above 50,000 dollars creates taxable imputed income for the employee, calculated using an IRS table and reported on the W-2. It is also subject to payroll taxes.
What is AD&D coverage?
Accidental death and dismemberment pays an additional benefit if an accident causes death or a covered loss. It is usually offered alongside group life and does not replace it.
Can employees keep their coverage when they leave?
Many policies offer conversion to an individual policy or portability to keep group-rate coverage. Deadlines are short, often about 31 days, so employees need to know them at termination.
Who is the beneficiary and how often should it be updated?
The employee names the beneficiary. It should be reviewed after marriage, divorce, birth or a death in the family, because an old designation can send the benefit to the wrong person.
What is a waiver of premium?
If an employee becomes totally disabled while covered, many policies continue the life coverage without further premiums. Age limits and proof requirements vary, so confirm the terms.
Are life insurance proceeds taxable to the beneficiary?
Generally not, because death benefits are usually not treated as income. The imputed income described above is a separate tax issue for the employee.
Can the benefit be paid early for a terminal illness?
Many policies include an accelerated death benefit for terminal illness. Eligibility, amounts and the effect on the final payout vary by carrier, so we compare them.
Related guides.
When an Employee Dies
The benefits steps that matter and their order.
Group Life and AD&D Plan Design
Benefit amounts, imputed income and portability.
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Where the Rules Come From.
The laws and rules named on this page link to the statute or regulation they come from. This is general information, not legal or tax advice, and rules change, so check the current text.
ERISA (29 U.S.C. Chapter 18)
The federal law that sets reporting, disclosure and fiduciary rules for employer-sponsored benefit plans.
COBRA Continuation Coverage (29 U.S.C. 1161)
Requires many group health plans to offer temporary continuation coverage after a qualifying event.
An independent employee benefits consulting firm. We look at the entire benefits program — cost, plan performance, risk and administration.
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