Key takeaways
- Benefits drive retention. Nearly 40% of employees say they would leave their current employer for better benefits, even without a salary increase.
- Health, dental and vision are the baseline. Basic life insurance is one of the few benefits that can make a benefits package more competitive.
- Basic life insurance gives your employees peace of mind. The coverage exists entirely to take care of their loved ones when it matters most.
You can spend months building a benefits package and still walk away wondering if you got it right. Medical, dental, vision—the essentials are covered and the retirement match is competitive. On paper, it looks strong.
But a strong benefits package doesn’t just support employees while they’re working. It also helps protect the people they care about when it matters most.
How Employer-Provided Basic Life Insurance Works
Employer-provided basic life insurance is also called group term life insurance. It covers your employees while they work for you and pays a benefit to whoever they’ve named.
You can structure coverage in two ways:
- Flat dollar amount, such as $20,000 or $50,000
- Multiple of the employee’s salary, often one or two times their annual pay
Since it’s a group plan, employees can sign up without a medical exam or waiting period to qualify for coverage.
Basic life insurance is usually the starting point. Most financial experts recommend having at least 10 times an annual salary in life insurance coverage. You can also offer voluntary life insurance. This allows employees to buy extra coverage at a group rate. Some plans also let employees extend coverage to a spouse or children too.
Why Basic Life Insurance Helps Make a Benefits Package Competitive
When your employees decide to stay or leave, salary is only one factor. They’re also considering the overall benefits package. And basic life insurance is part of why it helps make a benefits package competitive.
In a recent survey, 40% of employees say they would leave their current employer for better benefits, even without a salary increase.
Health, dental and vision benefits are expected. Most employers competing for the same talent offer them. Basic life insurance is where a package can stand apart. It addresses something the rest of their benefits don’t—taking care of loved ones when they pass away.
The Link Between Financial Wellness and Workplace Wellness
Most benefits packages and employee wellness programs are built around physical and mental health, and that makes sense. But financial health affects the workplace too.
The link between financial wellness and workplace wellness is built outside the office. Childcare costs and household bills don’t stay at home—they can follow your employees to work each day. For many people, those responsibilities don’t come with much of a safety net. That stress can make it harder to focus, and employers feel the impact too.
Basic life insurance addresses that uncertainty. It gives employees a way to protect the people they love financially if something happens to them.
An employee benefit survey found that organizations offering voluntary benefits say their healthcare costs would be higher and productivity would be lower without them.
Why Basic Life Insurance Can Be Overlooked During Enrollment
Even though it’s an important benefit, basic life insurance can be overlooked by your employees during open enrollment. They don’t use basic life insurance , so it’s easy to forget about it, or think it’s not important. For many people, open enrollment is probably the only time they even think about it at all.
And let’s face it, insurance terms can be hard to understand. Words like beneficiary, coverage multiple (or ratio) and portability are not part of your employees’ everyday language. When they’re reviewing several benefits at once, it is easy to skip over information they don’t fully understand.
Life stage matters too. Someone who is single and renting might not think much about life insurance. That perspective can change after getting married, buying a home or having children.
Helping Employees Better Understand Their Basic Life Insurance Benefits
By the time open enrollment starts, your employees are already making decisions under a deadline. Basic life insurance can easily become another box they check off without much thought.
One way you can help employees understand their basic life insurance benefits is to focus on what it could do for their family. A salary multiple or coverage amount doesn’t mean much on its own. When you explain how a payout can help cover everyday costs after a death, things become much clearer.
Open enrollment is also a good time to explain the difference between basic and voluntary life insurance. Some employees might not realize they can buy additional coverage through their employer.
You can also encourage employees to review their beneficiary information. Life events such as marriage, divorce or a growing family can change who an employee wants to be listed as their beneficiary.
The Bottom Line
The benefits you offer say a lot about how you support your employees. Coverage that includes health, dental and vision is a good one. A well-rounded benefits package also provides protection for your employees’ families when they need it most.
That’s what makes basic life insurance a valuable employee benefit. It exists entirely for the people your employees go home to. And offering it shows that your organization is thinking about the person, not just the employee.
Frequently Asked Questions
Basic life insurance is coverage an employer includes in their benefits package, often at no cost. Voluntary life insurance is extra coverage employees can buy on top of that at a group rate.
Employers should offer life insurance to their employees because it rounds out their benefits package, supports financial wellness and shows the team that they’re valued as people, not just employees.
Most offer a flat amount or a multiple of the employee’s salary, often one or two times their pay. The right amount depends on your workforce and goals.
Typically, yes. Coverage is tied to employment and ends when an employee leaves.
Yes. Many employers offer basic life insurance as part of their benefits package and make voluntary life insurance available for those who want more. Offering both gives employees a base and the option to build on it.
