Which type of life insurance do businesses typically use to cover employees?

Businesses typically use a group policy to cover employees because this type of insurance offers benefits to a large number of people under a single contract. Group policies are often more cost-effective compared to individual life insurance, allowing employers to provide coverage for multiple employees at a lower premium. This is particularly advantageous for businesses since it improves employee benefits packages without imposing a significant financial burden on the company.

Group policies also facilitate coverage for employees without the need for individual underwriting, meaning employees can be enrolled without extensive health evaluations, making access to life insurance more inclusive. Additionally, these policies usually feature favorable terms, such as guaranteed issue, where employees do not need to prove insurability. This allows businesses to support their workforce effectively and foster employee retention and well-being.