How the COVID-19 crisis has highlighted the need for life insurance benefits


These unprecedented times have left many in a state of financial insecurity and concerned for their financial futures. Unpreparedness for sudden unemployment or the loss of a family’s primary wage earner has people scrambling to protect themselves and their families should they be directly affected by this pandemic.

COVID-19 has underscored the importance of protecting one’s family with life insurance. For many Americans, the easiest way of obtaining life insurance is through an employer benefit package. An employer’s insurance offerings are a core consideration when choosing a job, so it’s critical that in addition to comprehensive health insurance, you’re also offering robust life insurance options. But just offering life insurance isn’t enough anymore — employers also need to educate employees on the benefits of life insurance, detail the specifics of each available plan, and urge them to enroll as a proactive step in protecting their family’s financial security.

What to consider when choosing group life insurance
There are two main types of employer-provided group life insurance: Basic Employer-paid Life and Supplemental/Voluntary Life Insurance. Many employers offer Basic Employer-paid Life and cover part of the premium, but it’s also advised to offer Supplemental/Voluntary Life Insurance as well to ensure employees have sufficient coverage to meet their family’s needs. Employees who enroll in Supplemental/Voluntary Life Insurance have the cost deducted from their paychecks.

A comprehensive life insurance plan should also provide resources to help employees and their dependents navigate certain unexpected events or stressful times — the pandemic being a perfect example. Some additional benefits to look out for include counseling, financial and legal consultations, identity theft services, identity theft protection, and tools to help put together wills, power of attorney and other legal documents.

Offering life insurance options that go the extra mile will provide employees with a sense of security and peace of mind, which translates to increased retention for employers.

What to know about continuation of coverage
To further ease worries brought on by the pandemic, another important aspect to consider when choosing life insurance is a plan’s provisions for continuation of coverage. The role of continuation of coverage is simple — to ensure those enrolled in employer-provided insurance are covered for an extended period of time when they’re no longer eligible for coverage under the plan. With many companies forced to downsize or furlough parts of its workforce since the pandemic began, the need for continuation of coverage has become abundantly clear to more employers.

While the terms for continuation of coverage vary by plan, these policies extend coverage by allowing employees who have been laid off, taken a leave of absence, or are on disability leave to maintain coverage for a period of time stated in the policy, usually one to three months for layoff and leave of absence, if their employer continues to pay their premium. This assurance of coverage is especially important due to the pandemic when employees may worry about layoffs or becoming disabled due to COVID-19.

Another good feature to include in a group life insurance plan is reinstatement of benefits for employees who are rehired within a 12-month period by eliminating the need for a new Eligibility Waiting Period and Evidence of Insurability (EOI).

Lastly, it’s important for employees to know that if they don’t return to work by the end of the continuation period, they have the option to convert their group life coverage to an individual life insurance policy and pay their premium directly to the insurance company.

Educate and encourage employees to enroll
With no clear end in sight for this pandemic, employers should use this as an opportunity to educate employees about the benefits of life insurance and why it’s a smart investment. Employers should give new employees detailed information about the available life insurance options upon their arrival and remind current employees of the benefits of their group life insurance throughout the year.

Life insurance is an important part of an employee’s overall financial wellness strategy and providing employees with comprehensive options shows that an employer has the best interest and well-being of the employee and their family top of mind. This will not only give your company a competitive edge but will increase retention and a sense of loyalty among current employees as caring for employees beyond their work product is particularly imperative now.

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