Employers pull back from paying for group life plansReprints
Just as employers have shifted more responsibility onto employees for paying the health care bills, fewer are footing the tab for group life insurance, a new survey shows.
Just 38% percent of deceased individuals' partners report having a fully employer-paid life insurance policy at the time of their spouse's death, according to a MetLife Inc. study released Monday that surveyed 1,000 individuals who had lost spouses or partners in the last six months to seven years. That compares with 46% in 2009, when the survey was last conducted.
But even as fully employer-paid life policies disappear, employees remain dependent on the proceeds that come from group policies.
According to the survey, 71% of all proceeds that surviving spouses received came from group policies, with the remainder coming from individual life policies.
But the employer-paid coverage is often not enough, said Stephen Pontecorvo, Bridgewater, New Jersey-based senior vice president of group life products for MetLife.
“Whereas employers provide what I will call kind of a minimal death benefit amount in employer-provided life insurance plans, employees generally really need to take advantage of the offering that's available on a voluntary basis … to help provide adequate coverage in the event of a premature death,” Mr. Pontecorvo said.
The survey found that the financial consequences of a premature death today are greater than in 2009. Sixty-eight percent of survey respondents said a policy with three times the annual income of the deceased spouse was very helpful, down from 81% in 2009.
And 32% of respondents said they were “not at all financially secure” in the year following a spouse's death.
One reason is many employees don't take advantage of the supplemental life policies and services available to them, Mr. Pontecorvo said, adding that much of the problem stems from a lack of communication.
While most spouses or partners were aware of at least some available assets at the time of death, 51% were not involved in the selection of the spouse's coverage, and only 26% said their spouse had a will, MetLife said.
Employees “often aren't aware that those services are available” as part of many group life policies, Mr. Pontecorvo said of services such as will preparation or powers of attorney.
“We encourage employers to take on bigger responsibility as it relates to helping (workers) understand what the benefits available (are),” he said.