Small-group life is priced as a monthly rate per $1,000 of coverage applied to your group's total coverage (the volume). The rate depends mostly on your employees' ages, plus the plan design and carrier. A $50,000 flat benefit for 10 employees is $500,000 of volume, so every $0.10 of rate is $50 a month. Carriers set participation rules (employer-paid plans often require everyone eligible to enroll) and a guaranteed issue amount that employees get without health questions.
Starting from scratch? The group life hub covers plan design, the tax rules and how to request options →
We are licensed insurance brokers, not CPAs or attorneys. Treat the tax and legal points on this page as general education, and confirm them with your own CPA or attorney before acting.
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The pricing math
Every small-group life quote comes down to three numbers:
- Volume: total coverage across all enrolled employees. Ten people with $50,000 each is $500,000.
- Rate: monthly cost per $1,000 of volume. Life and AD&D are often quoted as separate rates or a combined one.
- Premium: volume divided by 1,000, times the rate.
$500,000 of volume at an illustrative life rate of $0.15 plus AD&D at $0.03 is 500 x $0.18 = $90 a month for the group. Doubling the benefit to $100,000 each roughly doubles the premium. Your quote will depend on your team's ages and the carrier.
Small groups are usually rated on the group's age mix, sometimes with age-banded rates per employee. That is why a team of mostly 20-somethings pays far less per $1,000 than a team in their 50s.
What moves your rate
- Ages: the single biggest factor. Older groups cost more.
- Benefit amount and design: flat amounts vs salary multiples; a high maximum on a salary-multiple plan can concentrate risk on a few people.
- Group size: the smallest groups (2 to 9) usually have less rate flexibility and more underwriting rules.
- Industry: some carriers rate certain hazardous industries higher, especially for AD&D.
- Bundling: some carriers offer better terms when life is sold with dental, vision, disability or medical.
Participation and eligibility rules
Carriers protect themselves from adverse selection (only the people who expect to need coverage enrolling):
- Employer-paid (noncontributory) plans commonly require all eligible employees to be covered.
- Employee-paid or shared-cost plans usually have a minimum percentage who must enroll.
- Eligibility is typically full-time employees working a minimum number of hours per week, after a waiting period you choose.
- Owners are usually eligible if they work in the business; see the S corp note in our imputed income guide.
Groups under 10 employees: for life insurance to count as group-term life under Section 79 when fewer than 10 full-time employees are covered, IRS Publication 15-B and the regulations generally require that it go to all full-time employees (or all who pass any evidence of insurability), that amounts be a uniform percentage of pay or follow the carrier's brackets within IRS limits, and that any evidence of insurability be limited to an employee-completed medical questionnaire with no exam. Small-group carrier plans are usually built to fit these rules, but confirm the design with the carrier and your CPA.
Guaranteed issue vs evidence of insurability
Each small-group plan has a guaranteed issue amount: coverage employees get without any health questions when they enroll on time. Amounts above that require evidence of insurability, a health questionnaire the carrier reviews. Small groups usually have lower guaranteed issue limits than large ones. If an owner wants a large group benefit (for example, 2 times a high salary), part of it may need underwriting. That is often the point where individual coverage for the owner makes more sense.
How to read a quote
- Confirm the benefit (flat or multiple), the maximum, and whether AD&D matches.
- Check the guaranteed issue amount and the age reduction schedule (benefits often drop at 65 or 70).
- Look for portability and conversion, and any waiver of premium for disability.
- Note the rate guarantee period (often one to two years for small groups).
- Compare the total monthly premium, not just the rate.
When we quote your health plan, we can include group life on the same proposal, so you see the full benefit package. Start with the form below or our business plans page.
Frequently asked questions
How much does group life insurance cost per employee?
It depends on ages and the benefit. Because pricing is per $1,000 of coverage, a $25,000 or $50,000 flat benefit for a young-to-middle-aged team is often one of the least expensive benefits a small business can offer. Get an actual quote using your employees' ages and ZIP codes to know.
What is the minimum group size for group life insurance?
Many carriers will write group life for as few as two eligible employees, sometimes including the owner, though the smallest groups face more underwriting rules and less pricing flexibility.
What is AD&D?
Accidental death and dismemberment coverage. It pays an additional benefit if death results from a covered accident, and partial benefits for certain injuries like loss of a limb or sight. It is commonly bundled with group life at the same amount.
Start your life insurance request
Tell us what the coverage is for and who it would cover. For most requests we ask for each person's date of birth and sex so Erik can prepare for the call. We do not ask health or tobacco questions in this initial request. This is a request for help, not an insurance application or a promise of coverage.
Written by Erik Moran
Erik co-owns Moran Insurance Group with Amanda Moran and handles the agency's life insurance cases, from key person and buy-sell coverage to trust-owned policies. He works alongside clients' CPAs and attorneys, who make the tax and legal calls. More about Erik.
Sources
Moran Insurance Group is a licensed insurance agency. Our brokers are not CPAs, attorneys or tax advisors, and nothing on this page is tax, legal or investment advice. Tax figures and rules reflect our understanding as of October 2026 and can change. Coverage is subject to carrier underwriting and state availability. Confirm anything tax or legal with a licensed CPA or attorney before you act on it.