As a business owner, you may be contacted to complete an insurance premium audit. Learn what the insurance audit process entails and how to prepare.
Group life insurance may benefit your business
State Farm® offers group life insurance that provides a win-win for you and your employees.
Why consider group life insurance?
As an employer, you understand the importance of employee perks to hiring the best and the brightest. One of these benefits is group life insurance. State Farm can help you set up a plan for five or more employees (except in Massachusetts and Rhode Island). For details and eligibility, contact your State Farm agent.
Advantages for you
There are positive aspects to purchasing group life insurance for your small business. These include federal tax incentives for you and a valued perk for your employees.
- Federal income-tax deductible premiums
- Desirable fringe benefit to offer new employees
- Reduced turnover, saving you money in hiring and training costs
- Employee security, loyalty and higher morale
- Valuable life insurance protection provided at a low group rate
Speak with your tax advisor for more details.
Advantages for your employees
Business life insurance incentives aren’t limited to business owners. Here’s what employees can expect:
- Right to name and change beneficiaries at any time
- Waiver of premium for disability benefit rider provided at no extra cost
- Life insurance offered at a low group rate
- Convertible to a permanent policy if you leave your employer
Group life insurance next steps
Your State Farm agent will help you complete a fact finder to gather information about your business and your group life plan objectives. A proposal will be prepared for you to consider.
Features and benefits of group life insurance
Features of group life insurance
- Coverage for a group of people under a single policy
- Typically offered by employers to employees
- Lower premiums due to group risk pooling
- Simplified underwriting; often no medical exams required
- Basic coverage amount predetermined by the policy
- May include optional add-ons (e.g., accidental death, waiver of premium due to disability)
Benefits of group life insurance
- More affordable life insurance option
- Helps provide financial security to beneficiaries
- Easy enrollment and minimal paperwork
- Helps attract and retain employees
- Coverage continues as long as employment is maintained
- Can offer peace of mind to employees and their families
Who might be eligible for group life insurance
- Employees: Most commonly, full-time employees of an organization are eligible
- Dependents: Some plans extend coverage to spouses and dependent children
- Members of a Group: Members of organizations, associations, or unions, if the group policy is arranged
- Specific Classes: Eligibility may depend on job classification, length of service, or hours worked
Eligibility criteria are defined by the insurer and the policy sponsor (e.g., employer)
What do I need to get group life insurance?
To obtain group life insurance, you generally need:
- A group: An established group such as employees of a company, members of an association, or union members
- Group size: Typically a minimum number of participants (often 10 or more) is required
- Group sponsor: An entity (e.g., employer or organization) to apply and manage the policy
- Basic information: Details about the group members (age, job roles, number of participants)
- Plan selection: Decide coverage amount, benefits, and optional riders
- Premium payment agreement: Agreement on who pays premiums (employer, employees, or both)
- Application process: Complete application forms and comply with insurer requirements.
Medical exams are usually not required for individual members, but the group as a whole must meet underwriting standards.
Coverage in action
You’re a job applicant, weighing offers from two, similar companies. How likely are you to choose the one that offers low-cost group life insurance?
Frequently asked questions about group life insurance
The cost of small business group life insurance varies widely, but it’s often less compared to individual policies. Typical cost ranges around $20 to $50 per employee per year for basic coverage of $20,000 to $50,000. Premiums are often calculated as a rate per $1,000 of coverage (e.g., $0.50 to $2.00 per $1,000). What factors determine the cost?
- Number of employees covered
- Coverage amount per employee
- Age and health profile of employees
- Type of plan and additional riders
- Location and insurer
This answer was drafted with the assistance of Artificial Intelligence.
Yes, group life insurance premiums paid by a small business are generally tax deductible as a business expense, provided the policy is for employees. What are things to note?
- Premiums paid by the employer for employee group life insurance are deductible as a business expense.
- If the coverage exceeds $50,000 per employee, the cost of coverage above $50,000 may be considered taxable income to the employee.
- Benefits paid out to beneficiaries are typically income tax-free.
Consult a tax professional for specific guidance based on your business situation and local tax laws.
This answer was drafted with the assistance of Artificial Intelligence.
Groups typically not eligible for group life insurance include:
- Purely social or recreational groups: Groups formed solely for socializing or hobbies without a common employer or business purpose
- Informal groups: Groups lacking formal structure, consistent membership, or documented eligibility criteria
- Groups without a common bond: Groups where members do not share a common employer, association, or occupational connection
- Very small groups: Groups with too few members to meet insurer’s minimum size requirements
- Groups formed solely for insurance: Groups created only to obtain insurance without genuine commonality among members
Insurers generally require a bona fide relationship among members (e.g., employer-employee, professional association) to qualify for group life insurance.
This answer was drafted with the assistance of Artificial Intelligence.
Yes, labor unions are eligible for group life insurance as they represent a defined group with a common bond.
Get a local agent who gets you
There’s a State Farm agent nearby ready to offer personalized service to fit your specific needs.
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Prices are based on rating plans that may vary by state. Coverage options are selected by the customer, and availability and eligibility may vary.
This is only a general description of coverages of the available types of business insurance and is not a statement of contract. Details of coverage, limits, or services may not be available for all business and vary in some states. All coverages are subject to the terms, provisions, exclusions, and conditions in the policy itself and in any endorsements. Contact a State Farm agent for more information and a customized quote.
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Life Insurance and annuities are issued by State Farm Life Insurance Company. (Not Licensed in MA, NY, and WI) State Farm Life and Accident Assurance Company (Licensed in New York and Wisconsin) Home Office, Bloomington, Illinois.
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