Navjot Brar | Feb 09 2026 16:00
Why Life Insurance Matters for Your Team
February marks Insure Your Love Month—a reminder that showing care often goes far beyond what we say. For small business owners, that sense of care can also extend to the people who keep the business running every day. One meaningful and surprisingly simple way to demonstrate that commitment is by offering employer-sponsored life insurance.
Many small businesses assume benefits like life insurance are expensive, complicated, or only suited for larger organizations. In reality, group-term life insurance is accessible, cost-effective, and sends a powerful message that you value the wellbeing of your employees and their families.
Why This Benefit Makes a Difference
Today, only 42% of employees at small businesses
have access to employer-provided life insurance. That means more than half of workers at smaller organizations are left without this important protection. By offering even modest coverage, your business immediately stands out as one that cares about long-term security and invests in its people—an advantage that can play a major role in hiring and retaining top talent.
Why Employees Value Workplace Coverage
A 2025 LIMRA Workplace Benefits Study reported that 55% of U.S. workers
rely on employer-sponsored life insurance as their primary or only form of coverage. That percentage jumps to 59% among employees raising children under 18. For these families, this benefit provides reassurance that their loved ones would be financially protected should the unexpected occur.
By offering life insurance, you’re not just adding a line item to your benefits package—you’re offering peace of mind.
Affordable, Straightforward Coverage for Small Businesses
Group-term life insurance is one of the most budget-friendly benefits a small business can offer. Premiums typically range from $0.05 to $0.60 per $1,000 of coverage per employee each month. As an example, a $50,000 policy often costs between $2.50 and $30 per employee on a monthly basis, depending on factors like age, job duties, and plan structure.
Enrollment is also simple. Many plans do not require medical exams, and small companies—sometimes with as few as two to ten employees—may still qualify. Modern payroll and HR tools such as Gusto, Rippling, and ADP make benefit management and premium deductions easy. Many insurers also have dedicated teams that support small businesses through plan setup, compliance, and ongoing administration.
Key Tax and Compliance Considerations
Employer-paid life insurance is subject to the rules detailed in IRC Section 79. These guidelines govern how coverage is taxed and what employers must report.
- The first $50,000 of coverage provided by an employer is generally tax-free to employees if the plan meets nondiscrimination requirements.
- Businesses can usually deduct life insurance premiums as a standard expense.
- Any coverage above $50,000 is treated as taxable income and must appear on employees’ W-2 forms.
To meet nondiscrimination rules and maintain tax advantages, a plan must satisfy at least one of the following:
- Covers 70% or more of all employees.
- Ensures that at least 85% of covered employees are not classified as key employees.
- Uses an eligibility classification the IRS considers nondiscriminatory.
Accurate documentation—such as eligibility criteria, plan details, and participation records—is essential for meeting federal reporting requirements.
A Benefit That Builds Trust and Loyalty
Life insurance delivers tangible financial security and contributes to a stable, supportive workplace culture. More than nine in ten employees say their job satisfaction is closely tied to their benefits package. By adding life insurance, you reinforce a sense of stability and appreciation, showing your team you’re invested in their future, not just their day-to-day work.
Flexible Options That Grow With Your Business
You don’t need to start big. Many employers begin with a basic policy—such as $25,000 or $50,000 of coverage—and expand as their workforce or budget grows. Some plans also include accidental death and dismemberment (AD&D) insurance, or give employees the option to buy additional voluntary coverage for themselves or family members.
Pairing life insurance with other benefits, like disability or accident insurance, can lead to multi-policy discounts and streamline administration. Some carriers also offer portability features that allow employees to retain their coverage if they leave the organization, strengthening the long-term value of the benefit.
Helping Employees Understand the Benefit
Before officially launching your plan, consider holding a brief information session or sharing a simple FAQ document. Include details such as who is eligible, how to enroll, and how to choose or update beneficiaries. During open enrollment periods, it’s a good idea to remind employees to review their coverage levels and confirm their beneficiary information so everything remains accurate and up to date.
Final Thoughts
Insure Your Love Month is an ideal time to take a meaningful step toward supporting the people who contribute to your success. Group-term life insurance is affordable, easy to implement, and valuable to your employees—both financially and emotionally. Providing this coverage illustrates that your business is committed not only to productivity but also to the wellbeing of the people behind it.
If you’d like to explore plan options or see sample pricing, connect with your insurance advisor or benefits broker. This could be one of the most impactful and enduring investments you make for your team this year.
