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Life insurance is an employee benefit frequently offered by employers. Life insurance is an insurance policy that provides, in exchange for monthly, quarterly, or annual premium payments, a lump sum of money to the designated beneficiary of an employee who dies. Life insurance marks an employer as an employer of choice when desirable candidates select job opportunities.
Life insurance provides peace of mind for an employee who is concerned about how his or her family, or heirs, will make out financially in the event of his or her death. Life insurance provides a certain financial cushion for the employee's survivors, if the employee's death is not do to his fault. For example, life insurance carriers generally exclude some deaths, including death by suicide, civil commotion or riots, death occurring during military service, and other events that vary by policy.
Life insurance is purchased through a vast variety of options. Term life insurance, in which the insured or his employer pays a monthly, quarterly, or annual fee for the stated amount of insurance coverage is common. No investment or cash value accumulates or is built up in a term insurance account, but the account pays out the insured value at the death of the employee. Some term life insurance policies have a time limit; others increase their premium fee annually. Many financial advisors recommend term life insurance as most other insurance options cost more and involve an investment component that muddies the waters.
Permanent life insurance policies, that build up cash value in the policy over time, are available and are more costly. Older participants pay a large premium in return for the benefits as time is not available to build up the cash value of the policy. The most common forms of permanent life insurance are whole life, variable life, and universal life. Understand the differences in these life insurance policies by reading Understanding and Choosing Life Insurance.
Life insurance is an appreciated employee benefit. Sought after employees expect life insurance as a component in a comprehensive employee benefit package.
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Susan Heathfield makes every effort to offer accurate, common-sense, ethical Human Resources management, employer, and workplace advice both on this website, and linked to from this website, but she is not an attorney, and the content on the site, while authoritative, is not guaranteed for accuracy and legality, and is not to be construed as legal advice.
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