Group Term Life Insurance: The Basics for California Employers
Group term life insurance is the most common ancillary benefit offered alongside group health — it's inexpensive, highly valued, and straightforward to administer. Employer-sponsored group life insurance provides a death benefit to employees' beneficiaries at group rates far below what an individual could obtain. California employers of 5+ can typically obtain group life coverage with guaranteed issue (no medical underwriting) up to a standard amount.
Typical Plan Design
Employer-paid basic life: 1x or 2x annual salary (up to $50,000 IRS tax-free limit), employer pays 100%. Supplemental voluntary life: employees purchase additional coverage ($10,000 increments up to 5x salary or $500,000) through payroll deduction at group rates. Dependent life: optional coverage for spouse ($10,000–$50,000) and children ($5,000–$10,000). Accidental Death and Dismemberment (AD&D): typically paired with life, pays additional benefit for accidental death or specific injuries (loss of limb, vision).
Guaranteed Issue Amounts
Most group life carriers offer guaranteed issue — meaning no individual medical underwriting — up to a specified amount. For groups of 10+ employees, guaranteed issue typically ranges from $100,000 to $300,000 per employee. Employees requesting coverage above the guaranteed issue amount must complete a medical questionnaire (evidence of insurability). Guaranteed issue is a significant advantage over individual life insurance, especially for employees with health conditions who might be declined or rated in the individual market.
Cost
Employer-paid basic life ($50,000 coverage) typically costs $2–$5/employee/month depending on group demographics. For a 20-person group, that's $40–$100/month — minimal cost for a benefit employees genuinely value and that provides important financial protection to families.