Business Life Insurance
What Does Business Life Insurance Mean?
Business life insurance is purchased by employers for their employees, with the group typically designated as the beneficiary of the policy. For this reason, it is often referred to as a group life insurance policy and is commonly available to large organizations. By purchasing coverage in bulk, this type of life insurance provides a cost-effective benefit to its members, as they avoid the high monthly premiums associated with individual policies.
Insuranceopedia Explains Business Life Insurance
When employers purchase this coverage from a provider for their employees, they are responsible for paying a portion of the monthly premium, while the remainder is paid by the employee. The employer holds the master contract, and employees receive a certificate of insurance. This certificate allows employees or their beneficiaries to file a claim when needed.
However, there are some downsides to business life insurance policies. First, coverage is discontinued if the employee leaves the company. Second, employees have limited control over individual coverage and may need to pay for additional coverage not included in the group life policy. Third, healthy or low-risk individuals pay the same premium as high-risk coworkers. The advantage of group life insurance, however, is that high-risk individuals can obtain coverage at a lower cost.
