Why consider a Group Term Life Insurance (GTL) as part of your Employee Benefits?

Employees appreciate it when management shows it is concerned about families. Whatever a company does to guarantee loved ones are taken care of if the employee dies is going to increase a sense of loyalty to the employer.

Death can devastate the finances of the family. A company offers group term life insurance the assure the employees that a surviving spouse or the children can carry on without severe economic hardships.

Group Term Life insurance is renewable every year, and the company usually pays the premium. In Singapore, the maximum amount of Sum Assured typically ranges from 2 to 4 times the employee’s annual salary. By investing in Group Term Life insurance for employees, you show that you care about their family members.

Here are the standard features of a Group Term Life Insurance Plan:

Term Life pays a lump-sum benefit to the employee’s beneficiary in case of death from any cause. The total benefits are calculated 100% from your total sum assured, depending on your contract.

Accidental Death and Dismemberment (AD&D) provides coverage to group members or employees due to unforeseen events such as death, disability, and dismemberment caused by accident. Most providers will provide reimbursements for the costs of the hospitalization and a percentage of indemnity for temporary disability. Temporary disability may prevent an employee from working full time due to an injury or loss of body parts (loss of fingers, arm and/or legs). A percentage of wages or a monthly sum of the benefits will be provided for the period when an employee is not able to work.

Total Permanent Disability covers an employee if he or she loses the permanent use of limbs. When a disease strikes and permanently immobilizing the employee, the company presents medical proof to validate his state being permanently disabled beyond recovery. Most cases, the total benefit is 100% of the full Sum Assured.

Terminal Illness is a benefit for employees diagnosed with a terminal disease and a life expectancy of fewer than 12 months. Depending on the policy, usually 100% of the total Sum Assured is advanced

Burial Benefit is an additional rider paid on a fixed amount to the beneficiary as a burial benefit.

If you are convinced that Group Term Life is good for your company, then you need to compare the annual premiums in the market for comparison.

We capture some data from DIY Insurance Website, the tables below are a comparison of individual term life insurance across insurers in Singapore considering an example of a Male, Non-Smoker:

  • Policy coverage till 70 years old
  • S$1million Death and Total Permanent Disability (TPD) Coverage

Annual Premium

AgeAvivaAIAAXA LifeGreat EasternHSBC InsuranceManulifeNTUC IncomePrudentialTokio Marine
30$1,397$1,250$1,480$1,560$1,564$1,447$1,474
35$1,662$1,738$1,760$2,050$1,912$2,679$1,800$1,900
40$2,151$2,562$2,247$2,100$2,820$2,748$3,381$2,462$2,533
45$3,003$2,911$3,190$3,780$3,391$4,008$3,152$3,261

Female Non Smoker

AgeAvivaAIAAXA LifeGreat EasternHSBC InsuranceManulifeNTUC IncomePrudentialTokio Marine
30$1,031$878$900$1,010$1,091$941$1,039
35$1,285$1,174$1,230$1,350$1,344$1,755$1,114$1,347
40$1,627$1,665$1,450$1,610$1,840$1,852$2,409$1,396$1,705
45$2,219$1,823$2,200$2,400$2,217$2,648$1,794$2,147

Once you have decided to have a Group Term insurance policy for your employees and what are the inclusive add-on features, the next step is determining the company’s policy on the eligible employees for enrollment. Perhaps you may decide the coverage starts Day 1 or to wait until an employee is regularized. Age is also dependent on the policy but typically covers up to 60 to 70 years old.

Every renewal period, you provide the life insurance company a list of the updated employee’s basic salary, marital status, and gender. As an HR practitioner, you also need to perform the annual comparison reviews and determine if there changes in the sum assured. This is also the time to negotiate on cost savings like adding up new riders, but the premium amount is still the same or tailor fit the riders per needs of the company.

There are not many administration tasks in Life insurance as it requires less monitoring and fewer claims but here are some smaller points HR should take note:

  • Last Entry Age is the age of an enrolled person at the beginning of the insurance policy.
  • Maximum Cover Age is an imposed maximum age an employee can still avail the benefits usually at 60 to 70 years old.
  • Non-medical Evidence Limit is the maximum value of the policy an employee can claim without going through the medical examination
    Health Declaration is a kind of form requesting for reinstatement of policy, statement of good health, the addition of riders and any increase of sum assured.
  • Riders are a little feature that you could add on for fringe benefits such as family income, medical expenses, etc.

In my line of work, I helped an employee submit his terminal illness claim before he passed away. In this case, the employee was suffering from a terminal lung disease which made breathing difficult. The disease soon worsened making the person unable to work, and the doctor gave him less than 12 months to live. When I was done assisting him with his terminal illness claim, he said, “David, thank you for all that you have done for my family and me. Every day I see the Sun it is a bonus to me.” I was speechless, unable to find words to console him. This was the most heart-wrenching moment for me as a broker. Two weeks later we attended his funeral wake along with the company HR Manager and CFO.

When an employee dies, HR needs to advise the grieving family on what is the next step to do in complying with the requirement such as Certificate of the Attending Physician Report, submission of Medical Abstract, and Certified Death Certificate and other reports such as Timekeeping Sheet or the Employer’s Certification. This is not easy to do, as the whole process should be completed with much thought and consideration for the grieving family.

Not everyone is fully trained to handle the death of an employee perfectly. Close cooperation between the broker and HR provides immeasurable comfort to the next of kin in times of crisis like this. Is your broker or yourself up to the task should an uneventful happen in one of your employees?

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