Business owners get life insurance for their employees for several reasons. Sometimes it's as a benefit to the employees, and sometimes it's to help the business.
Here are the situations where you might want to consider getting life insurance for your business.
Life Insurance for Employees
Many businesses provide life insurance as an employee benefit. Like other types of insurance, employers can often get a lower rate for buying as a group versus an individual buying on their own.
Life insurance is also relatively inexpensive, so it's a low-cost way to add a fringe benefit that sets you apart from other employers.
If you don't want to bear the entire cost, you don't have to. You can buy a basic policy and give your employees the option to purchase additional coverage.
You can also not buy any coverage but instead partner with the life insurance company to give your employees a low-cost option for life insurance that they might not have on their own.
Businesses in high-risk industries especially want to consider offering life insurance. That way, employees and their families can feel secure that they'd be provided for if something ever happened on the job.
Life Insurance for the Business
Some businesses also buy life insurance for some or all employees with the business named as the beneficiary. This isn't just the business trying to profit off of an employee's death. When something happens to an employee, the business will usually take some kind of financial loss.
For any level of employee, there is usually a temporary loss in productivity, plus the cost of hiring and training a new employee. While there is always the risk of an employee quitting, many businesses still choose to take out a small life insurance policy to cover turnover, plus any death benefits.
Higher-level employees have a more direct impact on your profits and business relationships. Losing a key employee could even bring your business to a temporary halt that it might have trouble recovering from.
Taking out a life insurance policy for your key employees protects not just your business's profits but the livelihoods of everyone else who works for you who might face layoffs if losing a key employee causes your business to struggle.