Why should small businesses pay for life insurance?
- Claire Baker
- Feb 14
- 2 min read
Dead employees do no work. So why should your company pay somebody to die?
Or chop off a hand?
Life and AD&D is one of the last benefits that small businesses and startups add to their offerings.
It’s a real bummer to talk about.
And unlike short-term disability, the people who need it don’t complain if you don’t have it.
But here are some reasons you should care about life and AD&D insurance.
😢 Because of their family
Not every family has enough savings or assets to cover their death. Especially if they’re younger, the primary bread winner in their family, or just living paycheck to paycheck.
Funerals are expensive. There may be medical bills. Lawyers need to get involved to wrap up their affairs. And others may be depending on their income.
When an employee passes away, life insurance is an inexpensive way to make sure that the people who depended on them aren’t financially ruined by their absence (on top of everything else).
😱 Because death can be a surprise
The “accidental death” part in AD&D means that the family gets a little extra if the deceased couldn’t plan for their demise.
That’s fair, since they may not have had time to get their affairs in order. It’ll take their family more time and money to wrap up loose ends.
🧑🦽Because not everyone can get it on their own
Lots of people with chronic health conditions are uninsurable on their own. That doesn’t mean they don’t have families that depend on them or that their funerals are free.
For people with uninsurable health conditions (or conditions that make individual life insurance unaffordable), group life insurance may be the only way they can make sure they leave behind anything for their families.
🦶Because you don’t have to be dead to use it
When I was younger, I thought that the “dismemberment” in “accidental death and dismemberment” meant that your family got extra money if the accident that killed you left your body so mangled that your casket stayed closed at the funeral.
It actually means that you can collect if you lose the use of a limb.
People with fewer than four usable limbs can usually still work, but they need some extra accommodations to get through other activities of daily life.
AD&D covers that.
Lesson
There are people rely on your employees’ income and would be affected by their loss. Even if no one wants to talk about it, it’s classy to make sure that those people would be okay, even if your employee isn’t around anymore to collect paychecks.
Be classy and take care of your people. Even when they’re dead.
Did you know that you need to tax employees if they have employer-paid life insurance over $50,000? Even if they never use it?
You didn't? Why don't we talk about what other compliance surprises might be hiding in your payroll settings.
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