Here is why every business should consider buying a group life insurance for its employees:
- Financial Protection Employee’s Dependents: The group life insurance plan offers financial protection to the family of the employee and helps them to be stress free about their dependents financial future.
- Increased Productivity: A stress free environment helps nurture creativity and employees may not hesitate to go extra mile to achieve the employment objectives.
- Attract and Retain the Talent: The group plan makes the employee feel that they are the valued part of the organization. Life insurance is also considered one of the hygiene factors for best employers. It helps the company to attract more talented people.
- More Financially Attractive: If there is no group plan offered by the company, then the employees need to subscribe to a life insurance policy themselves to protect their life for which the employee need to pay more (approximately 30% more than the group premium) out of the pocket. This reduces the savings in the hands of the employees whereas in case of group plan the employee gets more in hand compensation.
- Tax Benefits: The amount contributed by the business towards the group life plan is considered as the business expense and not included in the profit.
So, the group insurance plan shall help your business grow more competitive.
Case for Importance of Group Life Insurance
The XYZ Pvt. Ltd. was experiencing an increasing attrition rate for the last few years. The CEO Mr. Subeer Chakrobarty was worried as the organization had the reduced internal talent pool from which future managers can be picked up. The average tenure of employment for mid and junior level employees had come down to 3.5 years from industry average of 6 years.
This was also leading to huge loss for the company since the new employees needed to be trained and as the HR head later realize, the organization had become a ladder organization for the qualified talent to earn experience and then shift to other organizations.
The management of the company contacted the HR department and asked them to find the reason behind this huge turnaround. The HR department after extensive enquiries concluded that all the companies have been providing the insurance cover to all their employees with the same compensation package as offered by the XYZ Pvt. Ltd. This was making XYZ less competitive in the employment space.
So, XYZ Pvt. Ltd. finally decided to take a couple of a group insurance plans including the group life policy. This step has improved the attrition rates quite well and the retraining costs for the staff.
The tradeoff between the training and attrition costs and the premium costs of the group policies have been almost double for XYZ, which hopes to land among the best employers soon.
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