Life insurance is a type of insurance that ensures a person’s beneficiaries get financial support upon her death.
Life insurance payouts can be made monthly, annually or in a lump sum.
In payroll, life insurance may come as part of an employee’s benefits package, deducted from his paycheck. Life insurance can be subject to taxes and regulations just like other benefits, depending on the relevant jurisdictions and policies.
How does life insurance work?
To receive life insurance, a person has to pay premiums. The size of these premiums will be based on factors like health and age.
In payroll, life insurance may come as part of an employee’s benefits package. In this case, a certain amount will be deducted regularly from his paycheck. Employers, themselves, may sometimes also contribute to life insurance to attract talent.
Life insurance can be subject to taxes and regulations just like other benefits. In general, employers must make sure they’re constantly in contact with the insurance providers regarding how much to deduct from an employee’s paycheck.
The four main types of life insurance
There are four main types of life insurance. These include term life, universal life, variable life, and whole life.
Term life insurance offers coverage for a specific amount of time – usually ranging from one to 30 years. In this case, the beneficiaries receive a payout if the person passes during the agreed upon time.
Variable insurance allows the policyholder to invest a portion of her premiums in investment options like bonds and stocks. The value of the policy can then fluctuate depending on the value of these investments.
Whole life insurance supplies coverage as long as the premiums are paid. It will also include a cash value component that can accumulate over time and be accessed by the policyholder.
Universal life insurance is a bit like whole life insurance, but more flexible since policyholders can adjust their premiums and survivor benefits.
Managing life insurance for a global workforce
There is a slew of challenges that come with managing life insurance for a global employees. For one, regulations and policies regarding life insurance tend to differ from country to country. Secondly, there’s the matter of administrative load and coordinating with multiple insurance providers across the globe.
In a lot of cases, companies with global operations may turn to third party providers like global payroll payments distributors to handle the ins and outs of life insurance.
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