[lillivette17]

Group life insurance policies are very popular and most employers offer it at no cost or shared cost with employees. Is this is a profitable business? How insurance companies make money?

[ROLCAM]

Group life insurance is very profitable.
Life insurance companies make their money from the premiums they receive and from the investment returns of those premiums.
Group life insurance is mass marketing.
It has different rules to individual
Insurance.
The premiums are usually cheaper.

[Fr_Chuck]

There is a charge of course, either paid by the employer or the employee. So there is always a cost.

Also normally they are limited pay, normally no more than the yearly pay of the employee.

So you are insuring working people for smaller amounts of coverage.

1. most employees change jobs or quit or retire before they die, so they don't have to pay off normally.

2.Often if a person gets very sick they end up losing job because they can't keep working, their medical coverage can be continued by Cobra but often these are not, and if they are, the people often can't pay the costs.

Not a large profit area, but you add up perhaps a 300,000 people insured, paying maybe 5 or 10 dollars a month the money does add up

[nikosmom]

It's profitable because unless it's a case of the company burning down and all its employees being trapped inside, the insurance company is only paying for the occasional death claim. When compared with the premiums paid, sure it's profitable. Also as Chuck mentioned, the employee is getting very little coverage- usually only up to 3 times the annual salary.

One other thing that comes in the play is that most often these policies are not portable. So when the employee leaves that particular job for whatever reason (quit, fired, disabled, retires), the employer owns the policy and the employee loses that benefit.

The employer is willing to pay all or a portion of the premium because it's a benefit that keeps employees happy and motivated. It's also a tax writeoff for the employer.