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Life insurance can be an important and valuable voluntary benefit for many small businesses.  Providing life insurance as a benefit for employees is seen as a welcome addition to any benefit package.  The best part of offering it is that it is considered a voluntary benefit.  That means that most plans do not require employers to pay more to offer life insurance coverage.  However, employers may choose to help pay for it for their employees as part of their compensation packages.

Life insurance coverage is one of the most sought-after benefits for so many reasons.  In this blog, we are going to give you the lowdown on all the reasons everyone should have life insurance coverage.

Reasons Life Insurance is Important:

Life insurance ownership in the United States rose for the first time in recent years in 2023. In 2023, 52 percent of Americans owned life insurance, up from 50 percent in 2022

Financial Protection for Loved Ones:

The primary purpose of life insurance is to provide financial protection for your loved ones in the event of your death. The death benefit can help replace lost income, cover outstanding debts, and fund future expenses such as education or mortgage payments.

It is important for employees to evaluate their personal needs for life insurance coverage in addition to what is offered through an employer.  For instance, employer provided coverage may only cover a small percentage of the financial burden on your family in the event of an untimely loss.

Make sure that you have enough coverage.

Peace of Mind:

Knowing that your family is financially protected can bring peace of mind. Life insurance can help alleviate concerns about how your loved ones will manage financially in the absence of your income. Many times, individuals may opt for secondary life insurance to ensure that their families would have 100% coverage in case of a tragedy.

Affordability Through Group Plans:

One of the largest selling points for group life insurance is price. Supplemental coverage is not free but typically costs less than an individual policy. Voluntary group life insurance plans offered through employers are often more affordable than individual policies. This makes it easier for employees to access coverage at a reasonable cost.

Convenience and Accessibility:

Group life insurance plans are typically easy to enroll in, and premiums are conveniently deducted from an employee’s paycheck. This ease of access encourages more individuals to obtain coverage.

Supplemental Coverage:

Voluntary life insurance can serve as supplemental coverage to any existing individual policies. This is particularly beneficial for individuals who may have life insurance needs beyond what their employer-sponsored plan provides.

No Medical Exam (in Some Cases):

Some plans require that individuals be examined to determine the health of the applicant prior to offering a rate for health insurance.  Those evaluated in great health may qualify for lower premiums, while those who have higher risks may be required to pay higher premiums for coverage.

However, in many cases with group life insurance they often do not require a medical exam for enrollment, making it accessible to individuals who may have health concerns that would impact their ability to secure individual coverage.


Some group life insurance plans offer portability, allowing employees to take their coverage with them if they leave their current job. This can be valuable in situations where an individual transitions to a new job or becomes self-employed.

Employee Retention and Satisfaction:

Offering life insurance as a voluntary benefit can contribute to overall employee satisfaction and retention. Employees appreciate benefits that provide financial security for themselves and their families.

“Of the 54% of Americans who own life insurance policies, 27% participate only in group plans offered by workplaces or organizations they are part of.” –

Tax Benefits:

Generally, life insurance benefits you receive as a beneficiary due to the death of the insured person, aren’t includable in gross income. The beneficiary is not required to report benefits as income. However, any interest you receive is taxable and you should report it as interest received.

For business owners’ life insurance premiums are not tax-deductible but they are considered a business expense, and thus depending on your policy and contributions for employees they may be deductible.

The death benefit paid out to beneficiaries is typically tax-free. Additionally, in some cases, the premiums for group life insurance may be tax-deductible for the employer. Learn more about this on the IRS website HERE.

The Lowdown on How AUI Can Help with Life Insurance

Quote "54% of Americans report not purchasing life insurance because they don't know what type or how much life insurance they need to buy." =Insurance Barometer Study conducted by LIMRA & Life Happens

Life insurance companies paid out $78.4 billion to life insurance beneficiaries and $88.1 billion in annuity benefits in 2019.

Life insurance is critical for anyone today. For most people the difference between having enough coverage and not can mean the world of difference. Make sure that you are protected and consider consulting with our team of knowledgeable brokers to determine the appropriate amount and type of life insurance coverage for your situation.

Do not put off till tomorrow what you can do today.  Contact Us today, and we can help evaluate your life insurance needs.

We do more than cover small businesses and individuals with the right insurance policies and benefit plans – what motivates our team is helping you save more so you can invest more in your team, family, and goals.

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