Life Insurance: US

This Life Insurance policy explains how your organization offers employer-sponsored life insurance, including basic coverage, eligibility, enrollment timing, optional supplemental coverage, and beneficiary designations, in a way that aligns with federal benefits rules under the Employee Retirement Income Security Act (ERISA).

The History Behind Life Insurance Policies in the US

Life insurance became a mainstream employer benefit as group coverage took off in the early 1900s, especially as industrial work and wartime service made early death a practical risk that families could not easily absorb. Employers liked group plans because they were simple to administer and cheaper per person than individual policies. That early momentum is why life insurance is still a popular employee Benefit/Perk.

The Internal Revenue Code generally lets employees exclude the value of employer-provided group-term life insurance coverage up to $50,000 from taxable income (with taxation above that amount), which made a basic employer-paid amount up to that limit feel like a sensible default.

ERISA does not require you to offer life insurance, but it does regulate many employer-sponsored welfare benefit plans, including life insurance, through fiduciary standards, claims and appeals rules, and enforcement tools that employees and beneficiaries can use in court. Employers responded with clearer plan documents and a tighter enrollment and beneficiary processes, with easy-to-digest information available to employees on-demand.

Which Law is the Life Insurance Policy Meant to Comply With?

If you create and distribute a Life Insurance policy that describes details about Life Insurance for your US-based employees, ensure you're complying with the Employee Retirement Income Security Act of 1974 (ERISA). This mainly means distributing the proper summary plan documents (SPDs).

How to Write a US-Specific Life Insurance Policy

• Start with "why" and introduce the concept of life insurance as a benefit that supports employees and their families.
• Define who's eligible.
• Explain what basic employer-paid coverage is provided automatically.
• Describe the option to buy supplemental coverage and note that cost varies by coverage amount.
• Direct employees to the plan documents or the plan website for coverage limits and detailed options.
• Require employees to name a beneficiary and keep it up to date.

When to Include this Policy in Your Employee Handbook

If you have employees in US and your company offers life insurance, it may be helpful to include this policy in your employee handbook. You can also make a more brief mention of your policy in a higher-level "benefits" overview. A clear, employee-friendly policy helps set consistent expectations, points employees to the controlling plan documents, and reduces day-to-day confusion about your plan.

ERISA states in 29 U.S. Code § 1024(b)(1):

The administrator shall furnish to each participant, and each beneficiary receiving benefits under the plan, a copy of the summary plan description and all modifications and changes referred to in section 1022(a) of this title.

Your employee handbook doesn't qualify as a summary plan description, but those documents can be pages and pages long. It's helpful to give employees a quick overview somewhere.

Other Considerations

None.

Exceptions

None.