Should employers in the Kingdom of Saudi Arabia provide life insurance coverage to employees? Group life insurance in the KSA is not mandatory, but employers should still consider providing it as an employee benefit for talent attraction and retention. In other words, group life insurance can make a company look more attractive to a potential new hire, and its presence may be enough to make a talented employee stay.

Think of it this way. Given a choice between two companies that pay the same salaries and offer similar working conditions and nearly identical benefits, an employee is more likely to sign or stay with the one that gives them life insurance, too.

About Group Life Insurance in the Workplace

Group life insurance is a contract between an employer and an insurer. The employer pays the insurance company a monthly, quarterly, or annual premium. In return, the insurer undertakes the responsibility of providing specific benefits, especially a death benefit, to the employees who are included or listed in the employer's group life policy. If a covered employee passes, the insurer pays their designated beneficiary/beneficiaries (e.g., spouse and children) the agreed-upon insurance benefit.

Employees may be allowed to enhance their life insurance benefits. Some group policies allow employees to pay an additional premium separately, directly to the insurer or coursed through the employer, to expand their coverage or increase their insurance proceeds.

Offering life insurance can be a cost-effective way for companies to enhance their overall benefits package. It emphasizes an employer's commitment to the welfare of their employees and may reduce their financial burden in the event of an employee's death. The insurance payout can cover the costs related to the loss.

Note that group life insurance policies are typically term insurance, usually with a tenor of one year. When implementing life insurance as a benefit, employers must consider the coverage amount and employee eligibility criteria. Group policies may offer less flexibility than individual life insurance policies, but they are more affordable and easier to manage for employers.

Group Life Insurance Inclusions

Group insurance benefit inclusions vary from plan to plan. They may include the following:

  • Death benefit: If a covered employee dies, the insurance company pays the employee's beneficiary/beneficiaries the death benefit stated in the policy. This benefit is subject to terms, however, so only death due to causes explicitly provided for or circumstances not expressly prohibited by the policy may trigger the benefit.
  • Death-by-accident coverage: Some policies provide an extra death-by-accident benefit if the employee's death was due to an accident.
  • Permanent total disability due to accident: A group life insurance policy with this inclusion will pay a covered employee a fixed sum (could be the full insured amount) if an accident renders them totally and permanently disabled as per the provisions of the group policy. The irreversible loss of sight in both eyes, amputation (or paralysis) of both legs, or loss of hearing in both ears are examples of total, permanent disabilities.
  • Permanent partial disability due to an accident: A group life policy may also pay a benefit if an accident renders a covered employee partially but permanently disabled. Insurance policies specify the conditions they deem to be permanent partial disabilities. Usually, the loss of sight in one eye, of hearing in one ear, or of function in one arm or one leg, as long as it is deemed irreversible or impossible to restore, is considered permanent, partial disability. The amount of the insurance proceeds is based on a standard deficits schedule.
  • Temporary total disability due to accident: This benefit is paid if a covered employee experiences a total but reversible disability due to an accident. The insurance policy may pay the weekly salary of the employee while they recuperate or recover the use of their faculties.
  • Medical expenses due to accident: If an accident leads to medical checkups, specialist consultations, diagnostic procedures, and inpatient hospital admission of a covered employee, a group life policy may pay for these medical expenses up to a specified ceiling amount.
  • Terminal illness: A group life policy with terminal illness coverage will pay a benefit if a covered employee is diagnosed with a terminal illness. The amount of the coverage may be the death benefit multiplied by an adjustment factor (e.g., 150% of the insurance amount).
  • Permanent total disability due to sickness: In this case, the insurer pays the insured employee a benefit (could be the full insured amount) if they are rendered totally and permanently disabled by an illness or condition not expressly excluded by the policy.
  • Permanent partial disability due to sickness: The benefit, in this case, is paid out if an employee becomes permanently and partially disabled because of an illness or a disease. The benefit is computed according to a standard deficits schedule.
  • Repatriation: If a covered expatriate employee dies, a group life policy with a repatriation inclusion will pay for the cost of repatriating the mortal remains of that employee to their country of origin.
  • Passive war risk: A group life policy may provide passive war risk protection. It will pay a benefit if a war breaks out and puts a covered employee (who is not actively participating in the conflict) at risk.

Providing Employees With Group Life Insurance

Insurance is a valued benefit among employees. If you're an employer in the KSA, consider providing your employees with a range of insurance benefits, including group life coverage.