U.S. BUREAU OF LABOR STATISTICS COMPENSATION AND WORKING CONDITIONS

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Life Insurance Benefits: Variations Based on Workers’ Earnings and Work

Schedules

by Raisa M. Blanco

Bureau of Labor Statistics

Originally Posted: March 30, 2012

According to data from the National Compensation Survey, nearly two-thirds of private industry workers were offered life

insurance benefits by their employers in March 2011; of these, 97 percent chose to enroll in this benefit. This high “take-up”

rate reflects that only 5 percent of private industry employees in basic life insurance plans were required to pay part of the

cost of coverage. Life insurance plans were much more likely to be offered to full-time workers than to part-time workers, as

well as to workers in higher earnings brackets, compared with those in lower brackets. These differences in access result in

differences in the participation rates reported by work schedule and earnings level.

Chart 1 shows that the difference in the rates of access and participation among full-time and part-time workers is substantial:

73 percent of full-time workers had access to life insurance benefits plans through their employers, and 71 percent

participated in such plans. By contrast, only 14 percent of part-time workers had access to life insurance benefits, and 13

percent participated.

When participation rates of workers in the lowest and the highest quartiles of earnings are compared, the difference is also

significant, with 22-percent and 80-percent participation rates, respectively, in the two categories. The workers earnings

also affect the requirement to contribute to the cost of coverage for life insurance. While only 4 percent of high-wage earners

were required to contribute for life insurance coverage, 10 percent of the lowest wage earners were in contributory plans.

In 2011, 95 percent of private industry employees with basic life insurance coverage were in plans that used one of two

methods of benefit payments: flat dollar amount formulas and fixed multiple of annual earnings formulas. Other methods of

payment exist, but they are uncommon; combined, they accounted for about 5 percent of the employees participating in a life

insurance plan. As shown in chart 2, among full-time workers, 59 percent were in life insurance plans that used a fixed
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multiple of workers annual earnings and 36 percent were in plans in which a flat dollar amount was paid. For part-time

workers, the comparable figures were 55 percent and 42 percent, respectively.

The method of benefit payment in life insurance varies considerably by employees earnings. While 51 percent of workers in

the lowest 25-percent earnings category were in plans with a flat dollar amount formula, only 25 percent of workers in the

highest 25-percent category were in such plans. (See charts 3 and 4.) Approximately two-thirds of the highest paid workers

were in plans with a fixed multiple of earnings formula.
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In addition to the differences in the type of life insurance, the value of the plans varied substantially by workers earnings

and work schedules. For full-time workers participating in plans with flat dollar amount formulas, the median payment was

$15,000, compared with $10,000 for part-time workers. Workers in the lowest 25-percent earnings category were in plans

with a median payment of $15,000, while workers in the highest 25-percent were in plans with a $25,000 median payment.

While not as pronounced, the multiple of annual earnings amounts were also higher for full-time workers than for part-time

workers. For example, 27 percent of full-time workers were in plans that used a factor of at least 2 applied to their amount of

annual earnings, compared with 22 percent of part-time workers. Among workers in the highest 25-percent earnings

category, 30 percent received at least double their annual earnings. (Data on the percentage of lower paid workers are not

available because they do not meet BLS publication criteria.)

These data are from March 2011 National Compensation Survey. For more information, see Employee Benefits in the United

States — March 2011 (TXT) (PDF), news release USDL-11-1112.

Raisa M. Blanco

Howard University summer intern (2011), Division of Compensation Data Analysis and Planning, Office of Compensation and

Working Conditions, Bureau of Labor Statistics.

Chart 1. Life insurance benefits: access, participation, and take-up rates, private industry workers, National

Compensation Survey, March 2011

Access Participation Take-up Rate

Full-time workers 73% 71% 97%

Part-time workers 14% 13% 91%
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Chart 2. Life insurance plans: percentage by method of benefit payment, private industry workers, National

Compensation Survey, March 2011

Fixed multiple of annual earnings Flat dollar amount

Full-time workers 59% 36%

Part-time workers 55% 42%

Chart 3. Percent distribution by method of life insurance payment, lowest 25 percent of average wage, National

Compensation Survey, March 2011

Method of payment Percent

Flat dollar amount 51

Fixed multiple of annual earnings 44

Other method 5

Chart 4. Percent distribution by method of life insurance payment, highest 25 percent of average wage, National

Compensation Survey, March 2011

Method of payment Percent

Flat dollar amount 25

Fixed multiple of annual earnings 68

Other method 7

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