Group life insurance policies are taken out by an employer (the policy holder) and offered to employees (the insureds). As with any life insurance policy, if the employee dies, the benefit is paid to a beneficiary - often a family member - chosen by the employee.

There are two different types of life insurance: permanent and term. Permanent covers a person for life, as long as he or she is paying the premium. A term policy provides coverage for an allotted amount of time. Most group life insurance policies are term policies - covering employees only while they are working for your business. In most cases, once an employee retires or even takes a leave of absence, he or she isn't covered by a basic group life policy.

Although not the norm for small businesses, you can beef up a basic policy. Provisions like coverage of a spouse and children or coverage that pays out for a serious injury like dismemberment can be added on.

Most employers cover the basic premiums of group life insurance. If they offer additional coverage, employees will pay the extra cost. Group life is really designed to supplement a person's life insurance policy. Point out to your staff that they have the option to obtain additional life insurance through an individual policy when rolling out a group plan.