How many times have we heard companies offering attractive incentives to retain their employees or attract the best possible ones? Growing attrition is one of the reasons for companies to announce new schemes like paid holiday trips, more health insurance cover, and a term insurance policy as the latest example. Though there are not too many companies offering term plans to their employees, the situation is gradually changing with many new companies jumping into the queue hoping to keep their employees motivated and happy, refrain them from looking for opportunities outside while also ensuring that their employees’ families are financially secure in case of their sudden demise.
Understanding employee term life insurance
Not many people are aware of this concept owing to its singularity. When employers gift term insurance to their employees, they pay a part of the insurance premiums while the rest of the premium amount is deducted from the employees’ salary. The employees’ lives are insured and their nominees are entitled to comprehensive policy coverage. This ensures that the employees have a term plan in place with a predetermined coverage amount to financially secure their loved ones.
Benefits of employee term life insurance
You cannot underestimate the importance of a term life cover, especially, in today’s unsure times. While this concept of employers aiding their employees in buying term insurance has secured them laurels in the industry, many people also hail it as an important step in educating people about insurance who continue to remain ignorant of it.
The premium rates are also comparatively low in employer-sponsored term insurance cover. Since employers procure this kind of coverage for all their employees, the risk is uniformly distributed in the overall group, thus, reducing their overall rates. Besides, the premium contributions are divided between the employer and employees, thus, making this kind of cover more economically viable.
The premium payment is simple with the same being directly debited from the employees’ salary accounts. This saves them the trouble of having to set up reminders for their monthly regular instalments.
Is this cover enough?
While ensuring term cover to employees may be a brilliant way to tackle attrition, the larger question still remains if the cover promised is enough to secure the financial future of the families in case of the sudden demise of the policyholders.
No financial cover is enough, given the sudden crises that the family members may find themselves in. The family would need the money to pay for its daily expenses while also paying for children’s future education, medical expenses, marriage, repayment of loans, etc. Given the nature of responsibilities, the amount assured in the employee term life insurance cover may not be enough, and that is why employees must consider buying an added term insurance policy to secure their nominees.
Also, the benefit of the employee term life insurance cover ends with the employees ends with them leaving the job for whatever reason, be it better job opportunities, working on a startup plan, etc. With the benefits of the cover dwindling with the employee’s departure, the family members are now exposed to a greater level of risk.
Term insurance is neither a fad nor should be associated with any employment opportunity. It is a necessity that we all must pay attention to.