Abstract
Financial security for employees is an important aspect of employees and the dependents. One way of attaining financial security for employees is through insurance covers. Employers provide various forms of insurance such as term life, whole universal life, accidental death and dismemberment, and long and short-term disability insurances. These alongside others provide security to the beneficiaries in case an employee become deceased, injured or sick. However, each insurance cover differs from another in various ways such as terms and conditions, maturity, compensation strategy or time for compensation. Term life cover compensates the beneficiaries after the death of the insured person or after an agreed time. Universal whole life cover provides compensation after the death of the insured but it’s more flexible than whole life insurance. AD&D cover provides income to the beneficiary just in case the insured dies unexpectedly or suffers an accidental injury.
Advantages of Different Insurance Programs
Human resource compensation is an essential part of the employment term for employees in today’s corporate world. Organizations package insurances as part of the compensations and benefits that the workers enjoy as part of the motivation. Large corporations globally now welcome the idea of providing insurance policies to their employees. However, insurance covers have a time duration some are short-term while others are long-term. Employees consider the duration aspects of an insurance program and evaluate the benefits of that come with different policies ( Bloom & Trahan, 2016) . On this paper, we define and discuss the benefits of four different insurance policies offered by the organization to their employees. These programs include term life, whole universal life, accidental death and dismemberment, and long and short-term disability insurances.
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Benefits of term life insurance
Term life insurance refers to a policy that pays out benefits upon the death of the insured person or after an agreed time. An employee can agree on such a term with the corporation to be included in the benefits packages. Term life insurance is an essential policy for an individual because it is less expensive compared to whole life insurance. Most instances term life insurance offers protection for a predetermined time ( Bloom & Trahan, 2016) . The insurance company hopes that the insured will outlive the term and in such a case the policy will expire making it much easier to pay that when the insured person dies within the agreed time. Whole Term policy premiums are higher to that because the insurance company will have to pay no matter when one dies ( Bloom & Trahan, 2016) .
According to Bloom & Trahan, (2016), term life policy is beneficial to an individual as it is flexible. The coverage of the policy can last for short periods such as one year. There are different locking options where a policy may be locked for five years. In such a case the term can be used to pay for short-term debts and expenses such as tuition. Term life insurance policy is suitable for young families. The policy does not build cash value and covers for a predetermined time making it less expensive than whole life insurance making it a better value for small families. Young families ate financially stressed as because of expenses such as the cost of children upbringing, auto loans, mortgage and saving for college and retirements expenses. A term policy is peaceful in such situations.
Term life insurance is preferred because of its simplicity. It is easy to understand the term policy making it easy to shop and compare the rates in different insurance companies ( Bloom & Trahan, 2016) . Potential clients consider three critical factors in decision making: coverage amount, length of the term and preferred insurance company. For many employees, term life insurance is a simple and affordable strategy of safeguarding finances ensuring financial health for loved ones just in case something happens to the insured.
Universal whole life insurance
Universal whole life insurance refers to permanent life insurance that is characterized by investment savings and low premiums ( Bloom & Trahan, 2016) . Compared to other forms of permanent life insurances whole universal life insurance offers more flexibility and greater control levels over the terms and details of their policy ( Bloom & Trahan, 2016) . The policy empowers insured to make changes on timing and the size of their premium payments, the terms of the policy are flexible, and adjustments are allowed to adapt to the changing financial needs and the different life stages of the policyholders ( Bloom & Trahan, 2016) .
The universal whole life insurance is more affordable than whole life insurance. The universal life policy is less costly compared to the whole life insurance. The policy also has flexible payment alternatives giving the policyholder an opportunity to decide on how much and when to pay. The universal policy provides the insured with a chance to adjust death benefits. Companies offering universal whole life insurance have terms allowing insured to reduce or increase death benefits depending on the needs of the policyholder. The policy has also guaranteed interest rates. Compared to life insurances where the value of the cash remain the same over the year’s Universal policy allow the cash value to keep growing. The premium also understands that human needs keep on changing thus allowing an adjustable coverage for changing needs ( Bloom & Trahan, 2016) . Consumers who need an insurance policy that can change with time are advised to subscribe to universal life insurance.
Accidental Death and Dismemberment
Accidental Death and Dismemberment is an insurance policy that covers provide financial security to the employees in cases of accidents causing death or a permanent injury to organs such as eyes and ears ( Belbase, Coe & Rutledge, 2015) . Most companies pay AD&D premiums because they are cheap. Accidental death and body injuries are rare making the policy much less expensive compared to similar life coverage ( Belbase, Coe & Rutledge, 2015) . It makes Accidental Death and Dismemberment an attractive benefit for employees, and it is offered on a voluntary basis ( Belbase, Coe & Rutledge, 2015) .
Belbase, Coe, and Rutledge (2015), also says that AD$D policy appeals to young employees working in highly risky organizations making them prone to accidents. Employees who apply for such coverage do not have individual disability insurance. In case of lost sight, limb or hearing from accidents employees is likely by recouping some of the income lost when that person could not work ( Belbase, Coe & Rutledge, 2015) . When purchased with any other life policy AD$D provide double indemnity or twice the death benefit to the beneficiary of the insured. AD$D can be provided as a standalone policy to employees or an addition to a group term life policy. It makes the AD&D a more flexible coverage ( Belbase, Coe & Rutledge, 2015) .
Long-Term disability insurances
Long-term disability insurance is a coverage policy that protects workers from losing their income in the event of inability to work for a long time as a result of accidents or illness that causes disability to the body. Therefore the policy covers a part of an employee’s income when the worker is physically disabled affecting the functionality of the person for a long time. The coverage is a long period running from two years to ten years period.
The insurances benefit workers by providing a portion of their income when they are injured for a long-term. It is common coverage for employees between the age of 35 and 65 years. According to Kostol and Mogstad (2014), employers use it as a motivator to employees who might be injured. During this time when an employee is injured, they continue to receive a fraction of their salary which motivates the employees to get to work after they get well.
Short-Term Disability insurance (STD)
It is an insurance policy that provides coverage to an injured employee for a short period. The standard time for STD is a short waiting period of up to 14 days ( Kostol & Mogstad, 2014) . From that time the insured is covered for the specified time in the policy which can be several months to 1 year ( Kostol & Mogstad, 2014) . The short-term policy provides income to an injured worker for a few weeks if they cannot work because of an injury or illness. The policy is paid only if the employee meets the defined term of disability as outlined in the policy. Minor illnesses or injuries are common in organizations which may lend a person disabled for a few weeks before they fully recover and get back to work. Income is essential at this time because of increased expenses such as medical costs. STD cater for part of the income for the time that the employee is sick ( Kostol & Mogstad, 2014) .
Organizations offer different policy terms to employees as part of the motivation. These insurance packages have a different kind of benefits to the employees and the organization. The bottom line benefit of an employee insurance policy is to provide financial health to beneficiaries of the policy ( Bloom & Trahan, 2016) . Term life insurance is beneficial to the employees because it is less expensive compared to whole life insurance, it is more flexible, and have simple terms and suitable for young families ( Bloom & Trahan, 2016) . Universal whole life insurance offers more flexibility and greater control levels over the terms and details of their policy ( Bloom & Trahan, 2016) . The policy empowers insured to make changes on timing and the size of their premium payments, the terms of the policy are flexible, and adjustments are allowed to adapt to the changing financial needs and the different life stages of the policyholders ( Bloom & Trahan, 2016) .
AD&D provide financial security to the employees in cases of accidents causing death or a permanent injury to organs such as eyes and ears ( Belbase, Coe & Rutledge, 2015) . AD$D provide double indemnity or twice the death benefit to the beneficiary of the insured when purchased together with a life insurance policy ( Belbase, Coe & Rutledge, 2015) . Kostol and Mogstad (2014), says that Short and long disability insurance policies provide partial income to an employee who is injured or ill for the specified time period in the policy.
References
Belbase, A., Coe, N. B., & Rutledge, M. S. (2015). Improving Employees’ Life and Disability Insurance Benefit Decisions: Results of an Employer Survey.
Bloom, D. E., & Trahan, J. T. (2016). Flexible benefits and employee choice: Highlights of the literature . Elsevier.
Kostol, A. R., & Mogstad, M. (2014). How financial incentives induce disability insurance recipients to return to work. American Economic Review , 104 (2), 624-55.
