Life Insurance

Although not required by law, many employers offer life insurance to their employees. In addition to health, disability and accident insurance, life insurance can be an attractive recruitment and retention tool for employers that want to hire skilled (and perhaps older) workers. 

The federal Fair Labor Standards Act (FLSA) does not address life insurance, travel accident insurance, or long-term care insurance. These benefits are generally a matter of agreement between an employer and an employee (or the employee's representative). 

There are a variety of forms of life insurance, but as an employee benefit, life insurance is usually offered through group-term policies. 


Individual Term policies pay benefits only if an insured individual dies during the policy’s term.

  • Due to the spread of risk among different individuals, group policies generally have lower premiums than individual policies.     
  • As employees age, premiums for each term generally increase.

Group-term life insurance does not include the following insurance:

  • Insurance that does not provide general death benefits, such as travel insurance or a policy providing only accidental death benefits.
  • Life insurance on the life of your employee's spouse or dependent. However, you may be able to exclude the cost of this insurance from the employee's wages as a de minimis benefit.
  • Insurance provided under a policy that provides a permanent benefit (an economic value that extends beyond 1 policy year, such as paid-up or cash surrender value), unless certain requirements are met.