Abstract
Employee insurance programs provide employees with benefits that are very critical to their lives and their families. Whereas the law requires employers to give some benefits to their employees, some companies give voluntary benefits to their employees. Each of the insurance programs differs in the kind of benefits they provide to the employees. Term life insurance offers employee protection for a specific period. Whole life insurance policy provides permanent protection where the policy runs for the whole lifetime of the person insured as long as the company pays premiums to maturity. Accidental death and dismemberment policy give benefits to the beneficiary only if the cause of the death is an accident. Long and short term disability
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insurance policy protects employees’ financial wellness through replacing lost wages in cases where illnesses and injuries prevent them from working. Introduction Employee insurance programs provide employees with benefits that are very critical to their lives and their families. Whereas the law requires employers to give some benefits to their employees, some employers give voluntary benefits to their employees. Different types of insurance programs available in an organization's compensation and benefits package include term life, accidental death and dismemberment, universal whole life, and long and short-term disability insurance (Griffes, 2003). Each of these insurance programs differs in the kind of benefits they provide to the employees. Employees insurance benefits help workers to plan for their old life as wells as for any unexpected incidences. It also helps employers make their employees happy or even helps in retaining them. The paper discusses employee insurance programs, including their definitions and advantages. 1. Term life insurance Term life insurance offers employee protection for a specific period.
At the expiry of the policy period, it is upon the employer to make decisions whether to continue with the policy or let it end. In case the life insured passes on during the insurance term, the beneficiaries will receive the death benefits. If the term of the policy expires before death, the insured cannot get any death benefit (Griffes, 2003). Term life insurance has been found to be the cheapest way of purchasing a considerable death benefit over a particular period for employees in an organization. The purpose of term life insurance policy is to insure people against loss of life. An individual’s health and age determine the amount of premium a company is needed to pay for the …show more content…
policy. Advantages of Term Life Insurance a) Less costly Term insurance policies are relatively cheap than whole life insurance since it gives protection for a specific period. It has fixed premiums which do not change throughout the policy period (Griffes, 2003). It is, therefore, easier for most companies to afford term life insurance for their employees than it is in other insurance policies. Fixed premiums also make it possible for the organization to plan for their expenditure on insurance for their employees in the course of the policy period. b) Flexible Term life insurance is more flexible than other policies because it offers organizations many options for the coverage period. The policy period can be one year or more. It is up to the company management to decide on the length they want the insurance policy to run (Griffes, 2003). It gives the organization an option whether to renew the policy for their employees after the expiry of the term insurance policy period or to end the policy. c) Simple It is easier for organizations that want to take a policy for the employees to understand term life policy. They can easily compare prices of different term insurances rates; therefore, they can easily make a decision on the rates they need to take. Moreover, companies need to make few decisions on the amount covered, the term period and the type of company they prefer (Griffes, 2003). Furthermore, term life insurance is an easy way of companies protecting their employees’ loved ones. 2. Universal Whole life insurance Whole life insurance policy provides permanent protection where the policy runs for the entire lifetime of the person insured as long as the organization pays premiums to maturity. When the insured person dies, the insurer pays the death benefits to the beneficiaries. Whole life insurance premiums are relatively higher than time insurance policy (Sailors & Institute, 2012). The policy premiums do not change throughout the life of the insured individual. Advantages of Whole Life Insurance a) Growth of Money Paid every Year Whole life insurance guarantees a growth of money the company pays for the insured every year. Based on the status of the economy, employees will enjoy interests that lead to the growth of their money. Moreover, the growth is tax-free; hence the insured do not get taxed on the accumulated amounts (Sailors & Institute, 2012). Also, the person enjoys tax-free dividends consequently the policy beneficiaries are likely to get higher benefits. b) Insured can Access to cash anytime at any age The employees covered by the policy can access their money at any age and at the time they require. There are no obstacles imposed to deter the employees from access the funds before the retirement age (Sailors & Institute, 2012). Insured employees can also borrow money paid to the insurer or wait to get the money at a later date. c) Dividends The policy pays dividends to the people insured. The dividends are also tax-free as they are returns of the premiums the company pays for the insured employee (Sailors & Institute, 2012). Insured employees can, therefore, enjoy an additional income from the dividends. 3. Accidental death and dismemberment The policy gives benefits to the beneficiary only if the cause of the death is an accident. This kind of life insurance is limited to accidents, and they are usually relatively cheaper than other insurance policies. The policy also protects employees against loss of essential body parts leading to their inability to work. In the case of an accident, the insurance company pays the death benefits up to a set total in spite of other policies the insurer and the insured hold (Employee Benefit Research Institute (Washington, D.C.), 2000). The company pays the insurance company to cover traffic accidents, drowning, equipment accidents, and falls among other accidents. Advantages of Accidental death and dismemberment a) Low premiums Premiums involved in the accidental death and dismemberment are small because the accidental deaths and other losses the policy covers rarely occur (Employee Benefit Research Institute (Washington, D.C.), 2000).
The policy is, therefore, cheaper for organizations. Because of the low premiums, most companies’ voluntarily take this policy for their employees. The insured beneficiaries are likely to get benefits if the person’s death is as a result of an accident.
b) Good for young employees
Young workers are likely to die more as a result of accidents than from illnesses. Companies, therefore, choose this policy because it can benefit their young employees more than the older employees. Moreover, young employees usually do not have any individual accident insurance cover hence the company helps these employees through taking for them an accidental death and dismemberment policy (Employee Benefit Research Institute (Washington, D.C.), 2000). The policy helps the young people to maintain the young and their families recover the income they lose through loss of their body
parts. c) Can serve as an additional policy An organization can purchase accidental death and dismemberment as a single policy or as an addition to the group term life policy. In cases where the company buys it as an additional policy, the insured employees or beneficiaries enjoy double indemnity or amount double of the death benefits to the beneficiaries of the insured person (Employee Benefit Research Institute (Washington, D.C.), 2000). In both cases, the insurer covers the employees insured through the provision of benefits due to accidental deaths or a loss of the essential body parts. 4. Long and short term disability insurance Long and short term disability insurance policy protects employees’ financial wellness through replacing lost wages in cases where illnesses and injuries prevent them from working (Griffes, 2003). Short-term disability provides protection for a limited period while long-term disability insurance provides employees protection over a long time. Advantages of Long and short term disability insurance a) Provides benefits to individual when they cannot work Both long term and short term disability insurance provide benefits to people when they cannot work due to the occurrence of disabilities. The short-term policy covers only the first few weeks after an injury and then it comes to an end. The long-term policy then starts paying for the injuries and goes for an extended period, for instance for a couple of months s to protect a disabled individual’s income (Griffes, 2003). b) Eases the household financial burden Both short term and long term disability policies lessen the financial load on the families the disability affects. The injury or illness causing the disability does not have to be as a result of working for the company (Griffes, 2003). With this policy, employees get covered on disabilities resulting from any cause. Conclusion Employee insurance programs provide employees with benefits that are very critical to their lives and their families. Term life insurance offers employee protection for a particular period. In case the life insured passes on during the insurance term, the beneficiaries will receive the death benefits. Whole life insurance policy provides permanent protection where the policy runs for the whole lifetime of the person insured as long as the company pays the premiums to maturity. Accidental death and dismemberment policy give benefits to the beneficiary only if the cause of the death is an accident. Long and short term disability insurance policy protects employees’ financial wellness through replacing lost wages in cases where illnesses and injuries prevent them from working. All the policies benefit the insured and their families through giving them financial protection.
COBRA was passed in 1986 and provides guidelines for continuous health coverage in case of sudden loss of a job or even death among other situations that cannot be avoided. Employees as well as employers have to participate in the program to make it effective. The employees are guided by the “Employee Benefits Security Administration” and the “Employee Retirement Income Security Act” to fill out forms of compliance. The law was designed to find temporary solutions for continued medical insurance so that the unemployed can still enjoy and access healthcare facilities despite the financial misfortunes that may render them unable to support themselves as well as their families as they find a permanent solution (Magill, 2009).
...only one underlying purpose and that is to increase profits for the company and shareholders. Corporations have taken the position that there is a profitable benefit in having life insurance policies in the name of their employees. Corporations are just maximizing their position by looking at all legal resources that the corporation has at its disposal. As an employee you are receiving some sort of benefit from the corporation such as a salary, medical, dental, profit sharing, 401k plan and any other benefit that is offered. I don’t believe that corporations always do the right thing in regards to their employees but, I also believe that employees have come to believe that they are entitled to more than what is already offered to them. As an employee you do have a choice on whether or not you want to continue to work for any corporation that behaves in this manner.
Large corporations take out life insurance policies on employees that have an increase chance of death. Now the problem with this is instead of a family member being the beneficiary, the company is. These corporations do not inform the employees that they have this life insurance. So when the employee dies, the company gets all the money from the insurance and the grieving family members get none. This act could be justified if the employee agreed on the company taking the life insurance policy and having the company be the beneficiary. The corporations have research who has an increased risk of death in the near future. The corporations pick people that smoke or at a higher risk for a heart attack or stroke or of a certain age. These acts are viewed as unethical, especially by the average ...
a. Defined benefit health and welfare plans—Defined benefit health and welfare plans specify a determinable benefit, which may be in the form of a reimbursement to the covered plan participant or a direct payment to providers or third-party insurers for the cost of specified services. Such plans may also include benefits that are payable as a lump sum, such as death benefits. The level of benefits may be defined or limited based on factors such as age, years of service, and salary. Contributions may be determined by the plan 's actuary or be based on premiums, actual claims paid, hours worked, or other factors determined by the plan sponsor. Even when a plan is funded pursuant to agreements that specify a fixed rate of employer contributions (for example, a collectively bargained multiemployer plan), such a plan may nevertheless be a defined benefit health and welfare plan if its substance is to provide a defined benefit.
What is Accidental death & dismemberment insurance? According to the definition from Bearu of Labor Statics its term used to “describe a policy that pays additional benefits to the beneficiary if the cause of death is due to a non-work-related accident. Fractional amounts of the policy will be paid out if the covered employee loses a bodily appendage or sight because of an accident”. ("BLS Glossary", 2016) This program does not stop you from receiving additional life insurance. This insurance program covers many forms of incidents such as Traffic accidents, homicide, falls, and heavy machine accidents and drowning. Now with these incidents there are a couple of incidents that are not covered suicide, war injuries, drugs and alcohol. If you have any drugs or alcohol in your system when the accident occurs they insurance company has the authority to withhold those
Offering employee benefits is one way a company must competes in today’s marketplace to retain old employees and attracts new ones. These benefit packages may range from offering basic health insurance to additional discretionary and perk benefits such as vacation and retirement packages. Benefit packages are often a large portion of employee costs and Federal mandates require an employer to carry and offer certain benefits even if they offer nothing else. Federally required employee benefits make up approximately a quarter of the costs associated with employer offered benefit packages. Some of these mandated benefits include Social Security, Worker’s Compensation Insurance, and the Family Medical Leave Act.
Health insurance provides benefits for sickness, injury, surgery, and prescription medication. There are a variety of plans with different
Today, world’s population is aging at a very fast pace and United States is no exception to this demographic change. According to the U.S Census Bureau, senior citizens will be accounted for 21% of the American population in 2050 (Older Americans, 2012). Although living longer lives may not seem like a negative sign, living longer does not necessarily mean living healthier. Older adults of today are in need of long-term and health care services more than any generation before them (Older Americans, 2012). Because of the growing need for senior care, millions of families are facing critical decisions on how to provide care for their parents. In addition, declining birthrates may cause people to have less familial care and support as they age. To be able to provide the necessary care for senior citizens government funded long term care insurance program is needed.
Term life insurance, also called temporary insurance, covers a person against death for a limited time, the term. Term Life provides a cost-effective solution for your temporary life insurance needs and gives you the flexibility to change your policy should your temporary needs turn into permanent goals.
Take note that other types of life coverage, such as term life insurance, have no cash value and offer cheap premium rates, which are lower than those of variable universal life insurance. However, the latter is more affordable than other forms of permanent coverage. Also, it combines an insurance policy with an investment vehicle, and its price reflects the dual nature of the policy. So, if you are looking for a good means to grow a financial asset or build a nest egg for retirement, universal life may be your best
Employers pay a monthly premium for this insurance. If employees need to take short-term disability, the insurance company pays a percentage of their salaries. This isn’t the only option, though. Some companies choose to self-insure their short-term disability plans.
Long and Short Term Disability Insurance A disability protection is an insurance policy that insures part of the individual’s lost earnings when that person is unable to work due to injury or illness (Chittenden, et.al, 2015). Some disability insurance policies cover the employees for a short span, such as months, while others provide a stable compensation for several years (long-term). For one to decide on whether to get an extended or short-term insurance cover depends on the individual’s expectations, needs, or budget. Advantages and Disadvantages of short-term Disability Insurance Short-term disability provides compensation to workers when they cannot work due to sickness or injury.
J. David Cummins, A. S. (1999). Changes in the Life Insurance Industry: Efficiency, Technology and Risk Management: Efficiency, Technology, and Risk Management. Springer.
Term life insurance plays a vital role in proper financial planning. People who buy term may do so for several reasons such as:
Accidents occur in the workplace but in secret. These most of the time lead to physical and mental injuries that might affect the worker way of living for the rest of their lives. It is estimated that more than 337 million workers get injured in their place of work or in the course of work every year leading to work-related diseases causing about 2.3 million deaths per year (United States Department of Labor, n.d.).