Young Adults Insured Under Parent Plans

Understanding Employer Life Insurance

Life insurance is an important tool that serves peace of mind and security for individuals and their families. Life insurance is a significant part of employee benefits, as well as one of the most common employer-benefits provided. According to a Forbes Advisor survey, at least 3 in 4 American adults have a form of life insurance. It is important to understand the aspects of life insurance, such as the following terms:

  • Policyholder: The individual who owns the life insurance policy
  • Beneficiary: The person(s) who receives the death benefit
  • Death benefit: The amount paid to beneficiaries upon the insured’s death
  • Premium: The amount paid regularly to the insurance company for coverage
  • Underwriting: The process of evaluating an individual’s risk profile to determine insurance eligibility and premium rates
  • Rider: An additional provision or amendment to a life insurance policy that enhances or customizes coverage (e.g., accidental death rider, waiver of premium riders and accelerated death benefit rider)

There are two categories of life insurance: term and permanent. Term life insurance has potential renewal or conversion into a permanent policy after the term, no cash value accumulation and fixed-term coverage (e.g., 10, 15, 20 and 30 years). Whole Life Insurance contains other types of cash-value insurance including universal and variable life, permanent coverage, and cash value accumulation over time.


Employees can choose between an employer-sponsored policy, individual coverage, or both. Group life insurance is cost effective for employees to obtain life insurance without needing a medical exam. Group life insurance is often sponsored by the employer with options for additional coverage to be purchased by the employee.


If you have any questions regarding life insurance, please contact your dedicated Creative Benefits, Inc. team.