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COURSE TITLE : LIFE INSURANCE
COURSE CODE: INS 432
IKENNA NWACHUKWU: 137162
DANIEL EZELIBE: 138546
BAYODE EMMANUEL TEMIDAYO: 139563
EMPLOYEE BENEFITS
• Employee benefits are non-salary compensations that
employers give to employees to provide financial
security for them and their families.
• These benefits are mainly indirect, non-cash
compensations that are either partly or fully paid for by
the employers
• Examples of employee benefits given by employers are;
1. Medical insurance
2. Retirement plan (pension plan)
3. Paid vacations, holiday or sick leave
4. Health plan
5. Life insurance
ADVANTAGES OF EMPLOYEE BENEFITS
To Employees
1. Provides financial security for employees and their families.
2. Increases job satisfaction and employee morale.
3. Healthier employees
To Employers
1. Increases employees productivity.
2. Helps employers to attract (i.e. recruits) and retain top talent.
3. Increases employees commitment to meeting the companies goals and
vision.
4. Tax advantage of deducting plan contribution
GROUP INSURANCE
• Group insurance is a type of insurance coverage whereby a single
contract covers an entire group of people.
• The employer in this case is the policy holder and keeps that actual
insurance policy which is called the master contact while employees
receive a certificate of insurance to show that they are insured.
CHARACTERISTICS OF GROUP INSURANCE
• It covers an entire group of people under one contract.
• It costs less than individual insurance since employers usually pay all
or part of the cost.
• The group must not be created just for the sole aim of getting
insurance.
• Does not require individual evidence of insurability (i.e. not
individually risk-based) but uses group selection of risks.
• Uses experience rating in the insurance plans so as to be able to
adjust premiums.
• The plan offers the same benefits to all members of the group.
GROUP LIFE INSURANCE PLANS
• This life insurance plan is widely used and is relatively inexpensive.
The major types of group life insurance currently used are;
1. Group Term Life Insurance
2. Group Accidental Death and Dismemberment Insurance
3. Group Universal Life Insurance
GROUP TERM LIFE INSURANCE
• Is usually renewed yearly.
• Provides employees with low cost protection during their working
careers.
• It remains active as long as the employee is part of the group.
• It can be converted to an individual cash-value policy within 31 days
of employee leaving the group without evidence of insurability.
• It cannot be converted to an individual term insurance policy.
• Used by commercial banks and some lending institutions to insure
the lives of debtors.
ADVANTAGES
DISADVANTAGES
• Employees can use it to
supplement their own individual
life insurance policies
• It can also include spouse and
dependent children.
• Low cost protection.
• Insurance is temporary and is
terminated when the individual is no
longer part of the group
• Is expensive for older workers to
convert it to an individual policy after
retirement.
GROUP ACCIDENTAL DEATH AND
DISMEMBERMENT INSURANCE (AD&D)
• AD&D is included in many group life insurance plans and pays
additional benefits to employees in case of death or certain types of
body injuries such as paralysis, loss of speech etc.
• Many plans also have voluntary AD&D which employees can
purchase. This voluntary coverage is paid for solely by the employees
GROUP UNIVERSAL LIFE INSURANCE
• Group universal life insurance can also be made available to
employees in addition to group term life insurance.
• Major characteristics of this plan are;
a. Plan Design: two approaches are used to design this plan. For the
first approach which is a one plan program (i.e. term insurance), the
employee pays only for mortality and expense charges while in the
second approach, there are 2 plans used whereby the employee wants
universal life insurance included with the term insurance and is
required to pay higher premiums so as to accumulate cash values.
b. Amount of insurance: employees can select the amount of
guaranteed coverage (one-five times annual salary) with no evidence of
insurability.
c. Mortality and expense charges: most groups using this plan have a guaranteed
mortality rate for three years before they can be regarded as experience-rated.
d. Premium flexibility: premiums can be reduced, increased or eliminated.
e. Loans and withdrawals: employees can make policy loans and withdrawals.
f. Options at retirement: Employees have the option of continuing the coverage
after retirement whereby the insurer bills the individual directly or they can take
up an option of terminating the coverage and withdrawing the cash value.
g. Dependent coverage: dependents such as spouse and children can be covered
under this plan by adding a term insurance rider.
CONCLUSION
• Employee benefits are important in personal risk management
program for employees.
• These benefits serve as a source of financial security for employees
and their family.
• It is important for employers to give attractive benefits so as to be
able to recruit and retain quality staff.
• Group insurance which covers many persons under one contract
reduces the cost of insurance to both employers and employees.