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Based on what factors is the Group Life Insurance premium set?

Based on what factors is the Group Life Insurance premium set?

Group life insurance – One of the peculiarities of this product is its variety. In general, premiums vary depending on age, profession and capital and, in some cases, on gender:

  • Age: the older the beneficiary, the higher the premium to be paid. In addition, insurers tend to reject insurance to those over 70 years of age.
  • Profession: there are a number of professions considered high risk as they are related to dangerous activities. Within these professions are: police, civil and military guards, divers, pilots, window cleaners at height, builders, miners, firefighters, and high-level athletes, among others.
  • Capital: can also vary between employees depending on the annual gross salary. When the company assumes the cost of the insurance, it can do so in 2 ways, fixed or variable, as we will see in the next section.
  • Sex: although since January 1, 2013 Life Insurance must not distinguish the sex of the insured to rate the insured (after the European ruling that prevented premiums from being calculated based on sex), some insurers could continue to do so.

Obligation by sectorial agreement: Collective Life Insurance Agreement

Companies may be require to provide life or accident coverage to their employees by sector agreements, autonomous community agreements, provincial agreements, national agreements or the company’s own agreement. It is known as Collective Life Insurance Agreement.

In this case, the agreement would establish:

  • To which group does the coverage apply: to all employees, to those who have been with the company for 12 months, to those with a certain seniority, etc…?
  • with what coverage (life, accident or combined life/accident, for example)
  • With what capital (a capital fixed by coverage, a multiple of the salary, reviewable or not, etc…).

Variable capital:

When the capital is subsidize by the company, very often it is a capital that depends on the salary of the employee (for example, 2 times the annual gross salary of the employee). Therefore, in many situations, capital is variable per employee.

Fixed Capital:

Similarly, there may also be fix capital (the same for all employees), ranging from 10,000 euros to more than 500,000 euros.

What benefits does Life Insurance have for the employee?

Savings compared to individual policies

Although there are no tax incentives related to this product – since the premiums are not exempt from personal income tax – employees can benefit from a much more competitive price when contracting it from their company. You can reach 40% savings compared to bank policies.

Recruitment and retention of talent

At a time when job competition is increasing in certain sectors, having Life Insurance is a differentiating element.

Employee welfare

Social Benefits are one of the main touchpoints within the growth stage of the Employee Experience.

Feeling of belonging to the company

Having a company that thinks of me, my family and my future is one of the reasons. That strengthens ties to the company and improves well-being.

Before taking out Life Insurance for your employees…

If you are already clear that group Life Insurance is one of the Social Benefits that you are going to include in your Compensation and Benefits program. There are a series of important factors that should be take into account:

Analyze the characteristics of your group

There is no single premium for the entire group. As we have seen, this will vary depending on the personal characteristics of the employee (mainly gender and age).

Study the different coverages

What does the coverage they offer you include? And why not? Better fixed or variable capital?

Before deciding, there are a number of questions you should consider. It is important to contact an insurance specialist who will pave the way for you and find the best coverage for your employees.

Choose an intermediary or specialist that simplifies your work

It is important that you choose an intermediary that provides a digital employee experience, that simplifies your tasks and that manages to give 100% visibility to the Group Life Insurance. In most cases, employees are unaware of what the company is giving them.

Check the success of your proposal

We recommend that after launching your Life Insurance benefit you follow up and ask your employees about their satisfaction with the new guest.