Small Business Life Insurance for Employees Cost

How Much Does Small Business Life Insurance for Employees Cost? Affordable Plans to Protect Your Team

In the current competitive job market, providing life insurance as an option in your small business employee benefits package can differentiate you. Life insurance not only shows your care for employees’ well-being but also offers beneficial financial protection to their families.

One of the initial questions that most small business owners wonder is: How much does it cost to provide life insurance for employees? The best news is, it’s usually more cost-effective than you might expect.

Here, we will discuss the costs, advantages, and types of employee life insurance that are suitable for small businesses so that you can make an informed choice about offering this valuable benefit.

What is Group Life Insurance for Employees?

Group life insurance is a form of policy provided by a business to a group of employees in one contract. It generally offers a guaranteed death benefit—usually equal to one or two years the worker earns—low cost, or no cost, to the employee. This policy is funded in full or in part by the business and is frequently one of the most appreciated non-wage benefits a company can provide.

Why Provide Life Insurance to Employees?

Attract and Retain Talent:
Providing life insurance provides you with a competitive advantage in hiring and helps retain dedicated employees. It indicates that you respect their contributions and are concerned about their future families.

Enhance Employee Morale:
Having assurance that their loved ones are taken care of financially if they pass away suddenly gives employees confidence.

Tax Benefits to Employers:
Premiums paid on group life insurance policies are usually tax-deductible as a business expense, which makes this a good money decision.

How Much Does Small Business Life Insurance Cost?

The premium for group life insurance for employees is based on a number of considerations, including:

Number of Employees: Larger numbers might be eligible for lower per-person premiums.

Employees’ Average Age and Health: Premiums are less expensive for healthier, younger teams.

Amount of Coverage: The more generous the benefit (e.g., 1x vs. 2x pay), the greater the expense.

Policy Type: Plain term life is less costly than whole life or other permanent coverage.

Usual Cost Range:
Most small companies pay $15 to $50 per month per employee for group term life insurance. For instance, offering a $50,000 policy would cost approximately $20–$30 per month per employee.

You may also provide voluntary life insurance plans, where employees pay for supplemental coverage through payroll deductions. This allows employees to add coverage at an affordable rate, while the company maintains its costs.

Types of Life Insurance Plans for Small Businesses

Basic Group Term Life Insurance

Most common and affordable
Offers coverage during employment
Renewable annually

Supplemental Life Insurance

Optional coverage paid by the employee
Can be added to the base policy

Permanent Life Insurance (Whole or Universal Life)

More expense
Has cash value component
Less typical in small businesses for complexity and expense

How to Set Up Life Insurance for Your Business

Determine Budget and Coverage Goals
Determine the level of coverage to provide and whether to pay in full or part.

Use a Licensed Broker
A broker can assist you in comparing plans, providers, and rates that suit your business’s requirements.

Select an Insurance Carrier
Choose a well-established insurer with experience in small business group plans.

Inform Employees
Clearly explain the benefits, cost (if any), and enrollment process to your team.

Final Thoughts

For a relatively modest investment, life insurance can yield significant dividends—not only for the financial security of your employees but also for the reputation and employee satisfaction of your business.

With options starting at as little as $15 per employee per month, it’s one of the most affordable ways to safeguard your employees and create long-term loyalty.

If you’re a small business owner who wants to give your team real value without costing an arm and a leg, group life insurance is a possibility that’s worth investigating. Talk to a reputable insurance advisor to determine the best fit for you and begin creating a more robust benefits package today.