What to consider when looking at life insurance for your employees

Content provided by a guest contributor.

Life can be full of twists and turns. One of the major events in life is the unfortunate possibility that one might become disabled or pass away unexpectedly. As a business owner, you are responsible for offering your employees benefits which can help them to prepare for these eventualities, which is taken care of in the form of life cover.

Life insurance offers critical illness cover, disability cover, emergency assistance, helps with funeral plans, and other financial services. If you are looking at a life insurance policy to meet your employees’ needs, there are certain aspects that you will need to consider. For example, will you be offering life cover for their parents or extended family, or will it be offered as an add on for those who choose it? If you are interested in looking at life insurance products for your employees, below are just some of the considerations to look at when choosing the right one.

How Much Coverage Do Your Employees Need?

One of the most important aspects to consider when looking for life insurance coverage for your employees is their financial situations as well as their health. This will require each employee to undergo medical tests to ascertain whether or not they need extensive medical benefits or not.

You should speak to your employees about what they are looking for in a life insurance policy and take all of this into account. You might find that some needs are different from other employees, so be sure to ask a financial advisor for assistance. Find an insurance company which offers a group life scheme that your all of your employees can contribute to monthly so that everyone has equal cover.

Which Employees Will Be Eligible?

You will need to carefully consider which employees should be eligible for the group scheme cover. For example, if there is a core group of employees who have been working for your company for years, ask them for input on which insurance options are best.

You could make a clause in the employee contract that after one year of employment your staff is eligible to become part of the life insurance policy. It would be considered discriminatory to only offer the option to managers, as this will likely cause your other employees to feel as though you do not value them. However, you should not offer this benefit to part-time or contract employees, as they may not be with your company long enough to receive the benefit.

Think About the Payment Structure

You will need to seriously consider the type of payment structure you will choose, especially if you are a small business with a tight budget. Looking into options such as group life insurance means that your employees will receive a set amount of life insurance or this amount will be based on their monthly income.

Permanent life insurance is another option that you could investigate, but it may end up being quite costly for many employees. Permanent life insurance coverage builds up money over time and is better suited to very healthy people. Group life insurance might be the best option for a small to medium-sized company, but you can get more information about which option is best for you directly from a financial adviser.

What Will the Cost Be to Your Company?

Offering benefits to your employees is a great way to maintain workplace happiness, but it will only work out if it does not cause your company to lose money. If you know that you cannot afford to offer permanent life insurance, you should rather look into a group life scheme where your employees contribute each month in order to receive the insurance.

You will need to create a budget with your bookkeeper in order to have a clear financial breakdown of your business. This should include all of the day-to-day costs as well as the fixed costs, such as your lease agreement for your vehicles or property. This way you will be able to see how much coverage you can afford to offer your employees.


When looking at a life insurance policy for your employees, you will need to have a clear picture of your finances before you make any final decisions. You will need to look at how much coverage your employees need, what payment structure you will be offering, as well as how much it will cost your company. Once you know these numbers, decide which employees will be eligible and speak to your staff about their needs and wants.


The content in this article was provided by Rogerwilco – a South African marketing agency based in Cape Town.

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