Basic life insurance

Offer life insurance with Gusto

Admins can see quotes and apply for insurance benefits anytime. You must offer medical coverage through Gusto in order to offer life insurance or any other benefits.

When your company offers life insurance through Gusto, all eligible employees are automatically enrolled. The policy is non-voluntary, meaning the company pays 100% of the premium and all eligible employees are automatically enrolled. Dependents are not eligible to enroll.

Set up deductions for an external life insurance policy

If you offer a group term life insurance through a broker outside of Gusto, you can add the benefit to Gusto to record taxes and collect any employee contributions.

Add life insurance to payroll

Follow these steps to record a life insurance benefit in your company account:

1. Go to the Benefits section.
2. Scroll to "Financial health" and click Group Term Life Insurance.
3. Select Yes, we currently offer this benefit.
4. Click Next.
5. Add a name for the benefit. This will appear on employee paystubs.
6. Enter the employee deduction per pay period.
   • If employees contribute different amounts, enter a placeholder amount for now. You can customize deductions once you create the benefit.
7. Enter the coverage type and amount.
   • The employer contribution, if any, is not recorded. Employees are only taxed on the coverage amount over $50,000, not on employer contributions. We'll automatically calculate and apply taxes based on the coverage amount you enter.
8. Select whether coverage is a flat amount or based on salary. If it's based on salary, enter the multiplier. 
9. Click Save & continue.
10. Select the employees covered by this benefit. You can customize their deductions or coverage amounts after you set up the benefit.
11. Click Save. 

Customize the benefit for each employee

Once you add life insurance to your company account, follow these steps if employees have different deductions or salary multipliers from each other. 

1. In your Gusto admin account, go to the Benefits section.
2. Under "Manual payroll deductions," click the name of the benefit you set up. 
3. Find the name of an employee you need to edit and click Edit benefit.
4. Adjust their deduction, coverage type, or coverage amount, 
5. If you need to customize anything else, click Use custom group term life settings. You can enter a custom taxable income amount. You can also make it so deductions will not reduce the taxable income amount.  
6. Click Save.

When you enroll in a life insurance policy, you can designate a beneficiary or add one later anytime. A beneficiary is someone who will receive the benefits of a life insurance policy in the event of the policy-holder’s death. 

Some info to keep in mind before you choose your beneficiaries:

• Beneficiaries must be 18 or older to claim a life insurance benefit. If you designate a minor, they must be over 18 at the time of the claim or have a designated guardian and trust set up through your state court (Gusto will not take care of this on your behalf).
• You can have up to 5 beneficiaries on your account and assign varying percentages to each of them (i.e. Alex gets 80%, Jordan gets 20%).
• Rules and regulations about who you can list as your beneficiary—like age and where they live—vary by carrier and state. We’ll keep the beneficiaries that you provide on record, but be sure to confirm with your insurance carrier that your beneficiaries are eligible to receive the benefit.

Add a beneficiary in Gusto

If your company has a life insurance policy managed by Gusto, you can add one or more beneficiaries while initially enrolling in benefits. You can add or change beneficiaries anytime. Follow these steps: 

1. Sign in to your Gusto employee account.
2. Go to the Benefits section.  
3. Click the Life tile.
4. Navigate to the Beneficiaries & Distribution tab.
5. Click Add beneficiary.
6. Add your beneficiary's details.
7. Click Save.
8. To add multiple beneficiaries: click Add Beneficiary again and set the percentage of distribution to your preference.

In the event of the insured’s death, the carrier will reach out to Gusto for beneficiary information. Each time a beneficiary is changed, the most recent update will be used to distribute the policy benefits.

Change a beneficiary 

You can edit a beneficiary's information or change to a different beneficiary at any time. Follow these steps:

1. Sign in to your Gusto employee account.
2. Go to the Benefits section.
3. Click the Life tile.
4. Go to the Beneficiaries & Distribution tab.
5. Click Edit for the beneficiary you'd like to change or update.
6. Here you can edit the following:
   • First name
   • Last name
   • Relationship
   • Birth date
7. Click Save.

Change the payout distribution

You can edit the percentage distribution at any time. Here's how:

1. Sign in to your Gusto employee account.
2. Go to the Benefits section.
3. Click the Life tile.
4. Go to the Beneficiaries & Distribution tab.
5. Under "Payout Distribution," click Change Contribution.
6. Update to your desired percentages. The total percentage across beneficiaries must add up to 100%.
7. Click Save.