With more than 1000 insurance companies to choose from, you’re probably wondering which are the best group life insurance companies for your small business. We work with dozens of top rated life insurance companies. The advantage to representing multiple carriers is that we can find the best life insurance for small business owners based on your specific business needs.
The list of group life insurance companies can change at any given time depending on which companies are currently offering the best products and pricing.
Let’s first discuss what group life insurance is, how it works and why your business might want to offer it.
About Group Life Insurance
Group life insurance is a benefit provided by employers to help employees have access to life insurance coverage. According to LIMRA (Life Insurance Research and Marketing Association), group life insurance accounts for more than 45% of all life insurance in force. It’s a single contract or policy that covers an entire group of people and often provided in addition to other group benefits such as group health insurance, dental insurance and disability insurance.
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Term life insurance is the most common form of group life insurance however, some employers do offer group whole life or group universal life programs as well. Group life is normally offered to the employee free of charge without any medical history requirements and a maximum death benefit of 1X salary or $50,000.
Supplemental Group Life Insurance
Supplemental group life insurance programs are sometimes offered through a company benefits program as well. Additional coverage is usually paid for by the employee and allows employees to purchase more life insurance without a medical exam. Employees can buy more coverage in multiples of their annual salary up to a maximum amount stipulated in the contract.
Spousal coverage is also available and paid for by the employee. Most group life providers will not offer more than $100,000 coverage for a spouse and $500,000 for the employee since insurers do not collect health risk data from everyone under the policy.
Is Group Life Insurance Taxable?
According to the IRS; “IRC section 79 provides an exclusion for the first $50,000 of group-term life provided under a policy carried directly or indirectly by an employer. There are no tax consequences if the total amount of such policies does not exceed $50,000. The imputed cost of coverage in excess of $50,000 must be included in income. Using the IRS Premium Table, excess coverage amounts are subject to social security and Medicare taxes.”
Is Group Life Insurance a Good Deal?
For the Employer: A group life program along with other available benefits are widely sought after by many employees. Group benefits help employers to attract and retain the highest caliber of candidates for employment. Typically, an employer that offers $50,000 of coverage at no charge to the employee can expect to pay a life rate per $1000 of .026 to .055 per month per employee. Premium costs also depend on the industry you are in, the number of employees, their ages and their genders.
For the Employee: If the employee has serious medical conditions or is uninsurable for a personal life policy, group life insurance can be a great deal. Also, if the employee is young, the cost of group coverage is very inexpensive. However, group life rates increase every 5 years, so as the employee ages, the cost becomes more expensive. Long term, the employee would have been better off buying a personal life policy if he or she was in good health.
Another downside to group life policies is that they are often not portable. Which means, if the employee quits or leaves the employer, the coverage stays behind. Some employers offer portable policies at an extra cost but it is not very common.
How We Rate The Top Group Life Insurance Companies
Almost every insurance company that specializes in the group benefits field, offers a group life insurance program. The number of companies participating in the arena is exhaustive. However, there are a handful of group life providers that stand out among the crowd. The following list is in no particular order but they are some of the best group life insurance companies to consider.
Customer Service: Many business owners are too busy running their business and don’t have time to deal with servicing or billing problems. Insurance companies that do not provide excellent customer service did not make the list.
Financial Ratings: The financial strength of an insurance company should always be considered when looking for any type of insurance. It’s important that the company will be able to pay claims and be in business for the long term.
Insurance Company Rating Services We Follow:
A.M. Best: Provides objective opinion regarding an insurer’s, issuer’s, or financial obligation’s relative creditworthiness. Their top rating is A++ – Superior
Standard and Poors (S&P): Measures the credit quality of an insurer and the ability to meet their financial obligations. Top rating is AAA – Extremely Strong
Moodys: Provides opinion of future creditworthiness of an insurers ability to pay claims in relation to the investments and current book of business. Top rating is Aaa – Highest
Fitch: Fitch credit ratings provide an opinion on the relative ability of a company to meet their financial commitments, such as interest, repayment of principal, and insurance claims. Fitch’s’ highest rating is AAA – Exceptionally Strong
While credit worthiness is an important factor in an insurance company, competitive prices are just as important. You don’t want to pay more to one company when another company is offering the same coverage for a lower price.
The Best Group Life Insurance Companies
MetLife – Now Brighthouse Financial
MetLife is one of oldest and largest life insurance companies in the world. They are a leader in the field of group benefits. Along with group life insurance, they offer an entire portfolio of group benefit programs as well as individual insurance. They specialize in the large group marketplace for companies with more than 100 employees, but do offer group life programs for smaller companies with at least 5 or more employees. Their policy pricing is competitive but it is not the lowest.
MetLife offers basic group term life and group whole life. Additional coverage includes: supplemental life, dependent life, Voluntary Retiree Life and accidental death and dismemberment (AD&D). MetLife makes our list for financial strength and a vast array of group life options.
MetLife Financial Ratings:
A.M Best rating – A+
Moody’s rating – Aa3
Fitch rating – AA-
S&P rating – AA-
Principal Financial Group
Principal Financial Group is a fortune 500 hundred company and has been in business since 1879. Although it specializes as a financial company, 401K’s, pension plans and so on, it is also a leader in offering group benefits. Principal offers a full line of flexible, competitive group life options:
- Guaranteed coverage with no health questions
- Spouse and dependent coverage (up to age 26)
- Early access to benefits for terminally ill employees
- Flexible waiver-of-premium options for qualifying disability claims
- Optional Accidental Death & Dismemberment (AD&D) coverage
For employer paid group term life they offer a flat coverage amount or percentage of salary up to $1,000,000 of coverage. For supplemental coverage, the employee can purchase up to $500,000.
Principal is a highly rated and well respected company in the insurance industry.
Principal Financial Group Financial Ratings:
A.M Best – A+
Moody’s – A1
Fitch – AA-
S&P – A+
Hartford Insurance Company
The Hartford Life Insurance Company is part of The Hartford Financial Services Group, which was established in 1810. The company is one of the world’s largest insurance and investment companies. The company has been providing group benefits for more than 60 years and protects the lives of over 12 million people. They offer a full line of flexible group life options but most notably, Hartford has the most competitive rates when it comes to pricing.
Hartford’s Financial Ratings:
A.M Best – A-
Moody’s – Baa2
S&P – BBB+
Guardian Life Insurance Company
Guardian is one of the highest rated financial companies in the industry. They have been in business for over 150 years. Unlike many of the other insurance companies on this list, Guardian is a mutual company and not a stock company. A mutual company shares its profits with the policyholders in the form of dividends, lower policy premiums or credits to cash value accounts. Stock companies operate for the benefit of their shareholders, not policyholders.
Guardian offers a range of group life options but also unique features compared to other insurers.
1. Voluntary Life Re-Enrollment Option: Allows the employee to gradually increase coverage each year without annual medical exams.
2. Voluntary Life Automatic Increase Option: Helps protect beneficiaries against inflation increases by offering a 5% benefit increase for five years.
3. Accidental Death & Dismemberment (AD&D): Provides additional coverage in the event of an accidental death or bodily injury.
Guardian Life’s Financial Ratings
A.M. Best Company – A++
Fitch – AA+
Moody’s – Aa2
Standard & Poor’s – AA+
Lincoln Financial Group
Lincoln Financial was founded in 1905 and received an endorsement of Abraham Lincoln’s son, Robert Todd Lincoln, Lincoln Financial Group is the only company to carry Abraham Lincoln’s name. The company specializes in financial services, individual insurance and is one of the top providers of group life insurance in the industry.
Lincoln Financial offers a wide range of group life benefits and their pricing is very competitive. Some notable options of their program are:
1. Waiver of Premium option: Helps employees keep coverage if they’re disabled and unable to work for more than six months in a row.
2. Accelerated Death Benefit: Allows the insured to withdraw a percentage of their life insurance coverage when diagnosed as terminally ill, reducing the death benefit by the amount withdrawn.
3. Portability: Lets employees keep their coverage, even if they leave their company.
4. Conversion Privilege: Allows employees to convert all or part of their coverage to an individual life policy if they leave their company, without Evidence of Insurability (EOI).
Lincoln Financials’ Ratings:
A.M Best – A+
Moody’s – A1
S&P – AA-
Fitch – A+
And last but not least is SunLife Financial. SunLife has been providing insurance solutions to consumers for more than 150 years and they are a powerhouse in the benefits marketplace.
Sun Life offers very competitive pricing and a variety of solutions for business owners that can customize the best plan for their company:
1. Basic Life and Accidental Death & Dismemberment (AD&D)
2. Optional Life and AD&D
3. Dependent Life
4. Voluntary Life and AD&D
5. Voluntary AD&D
SunLife Financial Ratings:
A.M Best – A+
Moody’s – Aa3
S&P – AA-
Looking For a Group Life Insurance Quote?
We can help! just fill out the form on this page for a free, no obligation quote or contact us at: 914-633-1717. We do not favor one insurance company over the other. We are an independent insurance agency that works for you!