Life insurance: a traditional employee benefit we still need to talk about
Why death shouldn’t be a taboo topic in the workplace
It’s not pleasant to think about death, or the suffering of our loved ones who we’ll leave behind when we go. Yet taking the time to protect them from the financial shock that can come with loss is one final gift we can give to ease the pain of grief.
But what is your role in this as an employer? In many cultures around the world, the death of a loved one isn’t characterised by gloom but is instead an opportunity to celebrate their life and reminisce on happy memories. Can employers learn something from this more positive way of thinking to break down the taboo of talking about death in the workplace?
Lots of people will be familiar with the concept of taking out life insurance to protect their loved ones , to ensure bereavement doesn’t leave them unable to cover major expenses, such as mortgage repayments. Yet plenty still don’t take out a policy – resulting in a protection gap. Why is that?
Worry about long-term affordability, confusion about how policies work, and an overall desire to avoid thinking about tough topics like death are all likely reasons people put off estate planning. This is an even greater challenge in times like these, where high inflation and cost of living pressures leave people more and more squeezed.
And, although lots of employers do offer life insurance as a core part of their employee benefits (EB) strategy, for many employees, life insurance may be something they’re told about during their induction into a new job, but file away into the back of their minds and don’t think about again. Or they may choose not to take up on the offer when a co-payment is required.
But there’s an opportunity to refresh the conversation about life insurance – and the wider death in service benefits package you can offer.
In this month’s Viewpoint, we’ll explore the reasons why wrapping life insurance and related value-added benefits into an EB programme can help employees and employers alike. We’ll also look at why it’s important to clearly communicate your company’s life insurance offering to your people and engage with them on how to lead a healthy lifestyle, as part of the bigger picture.
What is life insurance?
Life insurance, also sometimes known as a group life and/or death in service benefit, is an insurance product employers buy from an insurance provider to offer to their people as part of a wider benefits package. A life insurance scheme pays out a monetary benefit to an employee’s beneficiaries if the employee dies whilst employed by the employer. The monetary benefit is typically a multiple of the employee’s salary or a fixed sum. Some policies also extend that cover to an employee’s spouse or partner.
Do employees still want life cover?
In a changing EB world where the conversation is often about new lifestyle benefits, private medical insurance and great perks, it’s worth thinking about if life insurance is still something that employees want and need.
And it seems it is. According to Forbes Advisor, 45% of employees in 2024 named life insurance a top benefit, rating it second only after employer-covered healthcare.1 And perhaps this is not a surprise, as many employees may now have parental and extended family dependants as well as children and would want to protect them financially in the event of their death. A survey by MetLife UK found employees are much more likely to buy insurance cover via company co-payment schemes than individually, allowing them to take advantage of a subsidy to gain protective cover they might otherwise feel they can’t afford.2
Why add group life to your company’s EB programme?
Many multinationals today already offer their people life cover, whether that is fully paid for by the employer or at a reduced rate or with a co-payment, which is a great way to help close the protection gap. But there are still opportunities to further enhance life insurance cover by writing it as part of a global programme.
By doing so, employers can make their life insurance benefits even more comprehensive for their people in their local markets. For instance, experts say adding supplementary riders, such as accidental death cover, can make group schemes both more attractive and valuable to employees in India.3 And, by writing life insurance via a captive, employers can cover any gaps that might not be available in the local market or not willing to be priced by local underwriting.
Nicola Fordham, Chief Solutions Officer at MAXIS GBN, explains why life insurance works so well in a global programme: “Life insurance is generally quite a stable risk and can be more predictable than something like medical insurance, where the performance has the potential to be influenced by external factors such as inflation or treatment costs. This means it is ideal to add to a global programme like a pool or a captive. The predictability means that it gives good balance to the programme and diversifies risk well.
“For multinationals who want to implement a minimum global standard to their EB strategy, life insurance can be a good place to start as this benefit is perhaps the easiest to standardise across the globe. By adding life insurance into a global programme, multinationals can have access to the data, governance and oversight to ensure a minimum standard of cover is applied where possible.
“And by writing EB via a captive, multinationals can respond dynamically to their employees’ needs in different markets, which often means enhancing non-medical limits, filling cover gaps and resolving issues with exclusions. For instance, local life insurance policies might exclude cover for deaths related to certain illnesses such as HIV/AIDs, or deny cover to an employee’s same-sex partner.
“Another example could be the non-medical limit, or free cover level, which is the amount of cover an employee can access without having to provide significant evidence of health. A captive might have the risk appetite to set this limit higher than the local insurer would to ensure their senior people can access their full cover without the need to provide medical evidence.
“Writing group life cover via a captive can allow multinationals to meet employees’ needs where they are by enhancing local policies and flexing their offerings to accommodate trends unique to each market."
How to communicate group life benefits
Creating a quality life insurance offering that meets your people’s needs is just the beginning. Statistics suggest communicating the availability of death and bereavement related benefits may well be just as important as offering them in the first place.
This shouldn’t be misinterpreted as a lack of employee interest in these types of benefits – quite the opposite. Because your people are already likely to be thinking about money.
PwC research suggests economic stress can affect employees’ emotional and physical wellbeing as well as their productivity and engagement, with immediate money problems clouding people’s ability to plan for long-term financial needs.5
Age, stage of career, and local context are also important factors. For example, McKinsey’s analysts predict life insurance benefits will becoming increasingly important to employees across Asia – because growing middle-class populations interested in financial protection tools are ageing at a time when many states are shifting retirement planning responsibilities onto individuals.6
Employers can show their support by making sure people know financial wellness benefits such as life insurance cover are available to them – and how to access them. So, how can you introduce – and reintroduce – the topic in ways that recognise your people’s changing needs throughout their careers?
Three ways to start the conversation about death in service benefits
1. Values
Employers who offer life insurance demonstrate commitment to a duty of care to their people. Remind your employees (and talent you wish to attract) that you offer life insurance as part of a suite of benefits that support their lives beyond the workplace – as well as the lives of the people they care about.
2. Purchasing power
For your employees, life insurance options can be more affordable, and can provide a higher level of cover without the need for evidence of health, than arranging individual cover. Your bulk purchasing power can also lead to more attractive deals. Are you offering more comprehensive policy terms or higher monetary amounts upon death than the average product available on the local market? Make sure you clearly outline what options you’re able to offer your people.
3. Tax
In some countries, lump-sum life insurance payouts from employer schemes are tax-free within certain limits, which can help an employee’s beneficiaries cope with the financial shock of their death. Keep up to date on local regulations in the markets you work in and make sure your employees understand what options are available for them.
Bringing estate planning into the 21st century
A growing array of digital tools that complement life insurance are bringing estate planning into the 21st century. So, while planning for one’s own death might not be a cheery topic, today’s technology can help smoothen the process of making the arrangements.
Many companies today are adding value to their life insurance benefits by offering digital tools that help people put their arrangements in order and pass on their final wishes to their loved ones.
Our partner MetLife UK, for example, offers funeral concierge benefits through its group life policies via Everest. MetLife and Everest’s tool gives customers access to their own online portal containing services from funeral planning tools to free online will writing services, as well as a secure, app-based digital vault for storing important personal information and memories, like photos.7
Lorraine Fernandes, Chief Legal Officer at MAXIS GBN, explains: “Having a will in place makes it much easier for your loved ones to sort everything out when you die. If you don’t have a will, everything that you own would be allocated based on the local law - which may not be the way you would wish to have your money and possessions distributed.
“If your company offers access to free will writing services, make sure you regularly remind your people it's available and why it’s such an important step to take at any stage of life.”
A chance to promote healthy lifestyles
If there’s one positive takeaway from thinking about death and those we’ll leave behind, it’s that it can become a motivating force for many of us to take better care of ourselves.
When employees take care of their health and wellness, everyone wins. As an employer, you can help your people protect their health long-term by introducing holistic EB programme initiatives to complement your existing healthcare and disability benefits offering.
Fitness memberships and virtual wellness solutions that tap into the popularity of wearable technologies tracking health, fitness and sleep are all great places to start. But it’s also important to address the stress that can drive unhealthy lifestyle choices and trigger cycles that become difficult to break. Offering mental health services benefits, complemented by health lifestyle workplace education campaigns (such as support for quitting smoking) are also positive ways to support your people through life’s challenges.
Nicola Fordham says: “When we introduce death and bereavement topics via an EB programme, we aren’t being morbid or depressing. After all, as the famous saying goes: 'in this world, nothing is certain except death and taxes'.
"Multinationals can take action to help their people to ensure their dependants and loved ones are financially protected when they would likely need this the most.
"Taking away this financial concern, and supporting them to look after their own health, will leave employees free to enjoy their lives and careers to their fullest potential.”
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[1] Miranda, D. Forbes Advisor (February 6, 2023) Best Employee Benefits In 2024 https://www.forbes.com/advisor/business/best-employee-benefits/ (Sourced: September 2024)
[2] Anon. MetLife (July 2022) United Kingdom Employee Benefits Trends Study https://www.metlife.co.uk/content/dam/metlifecom/uk/pdf/EmployeeBenefits/Brexit/1/1751-ebts-study-web.pdf (Sourced: September 2024)
[3] Bastien, M. Institute of Actuaries of India (May 2022) The Pricing of Group Life Insurance Schemes https://actuariesindia.org/sites/default/files/2022-05/The_Pricing_of%20Group%20Life%20Insurance%20Schemes.pdf (Sourced: September 2024)
[4] Anon. MetLife (December 23, 2023) Employees could be missing out on crucial bereavement support https://www.metlife.co.uk/about-us/media-centre/media-centre-archive/2023/december/employees-could-be-missing-out-on-crucial-bereavement-support/ (Sourced: September 2024)
[5] Anon. PWC (2023) PwC's 2023 Employee Financial Wellness Survey https://www.pwc.com/us/en/services/consulting/business-transformation/library/employee-financial-wellness-survey.html (Sourced: September 2024)
[6] Anon. McKinsey & Company (November 3, 2023) Global Insurance Report 2023: Navigating Asia’s evolving market https://www.mckinsey.com/industries/financial-services/our-insights/global-insurance-report-2023-navigating-asias-evolving-market (Sourced: September 2024)
[7] Anon. MetLife. Help employees and their families plan for the future, with Funeral Concierge https://www.metlife.co.uk/intermediary/employee-benefits/knowledge-expertise/funeral-concierge/ (Sourced: September 2024)
This document has been prepared by MAXIS GBN S.A.S and is for informational purposes only – it does not constitute advice. MAXIS GBN S.A.S has made every effort to ensure that the information contained in this document has been obtained from reliable sources but cannot guarantee accuracy or completeness. The information contained in this document may be subject to change at any time without notice. Any reliance you place on this information is therefore strictly at your own risk.
The MAXIS Global Benefits Network (“Network”) is a network of locally licensed MAXIS member insurance companies (“Members”) founded by AXA France Vie, Paris, France (“AXA”) and Metropolitan Life Insurance Company, New York, NY (“MLIC”). MAXIS GBN S.A.S, a Private Limited Company with a share capital of €4,650,000, registered with ORIAS under number 16000513, and with its registered office at 313, Terrasses de l’Arche – 92727 Nanterre Cedex, France, is an insurance and reinsurance intermediary that promotes the Network. MAXIS GBN S.A.S is jointly owned by affiliates of AXA and MLIC and does not issue policies or provide insurance; such activities are carried out by the Members. MAXIS GBN S.A.S operates in the UK through its UK establishment with its registered address at 1st Floor, The Monument Building, 11 Monument Street, London EC3R 8AF, Establishment Number BR018216 and in other European countries on a services basis. MAXIS GBN S.A.S operates in the U.S. through MAXIS Insurance Brokerage Services, Inc., with its registered office located in New York, USA, a New York licensed insurance broker. MLIC is the only Member licensed to transact insurance business in New York. The other Members are not licensed or authorised to do business in New York and the policies and contracts they issue have not been approved by the New York Superintendent of Financial Services, are not protected by the New York state guaranty fund, and are not subject to all of the laws of New York. MAR01478/1024
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