Employee-sponsored life insurance can be an extremely attractive benefit. For many people, buying life insurance can be a lengthy process including mounds of paperwork and physical exams.

Even small businesses can purchase a group life policy for their employees. Unlike individual policies, employer-sponsored plans often don't require applicants to pass a physical exam. And when an employee leaves the company, it's relatively easy to convert to an individual policy.

Most insurance companies require the employer to pay the premiums, or they require a certain percentage of employees participate in the plan. Typically, a business has to have more than 10 members for insurers to provide coverage.

Group life insurance rates are based on a number of factors:

• Number of employees
• Company claims history
• Type of occupations
• Gender and average age of the employees
• Employee salaries (if a salary-based plan is purchased).

Why are group life insurance premiums lower than those for individual life insurance policies?

Insurance companies base premiums on the overall risk. Group life insurance is less risky for the insurer because most likely, everyone in the company won't die at once. Turnover also decreases the chance that anyone will die while working at your company.

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Information from All Business.