By: 12 May 2022

As an employee of 3M, you are entitled to several benefits that protect against certain risks in life. These include a premature death, disability, illness and even your pet’s health (veterinarian bills).

3M Life Insurance

Part One of this series will focus on 3M’s life insurance benefits. Life insurance provided through the workplace is commonly referred to as “Group Life Insurance.” The insurance company “groups” you in a pool with your fellow employees covered under the plan. 3M’s plan is a form of “term” insurance that covers workers for a specific period (versus permanent life insurance).

Who is covered under the 3M life insurance benefit?

The group includes all active regular full-time and part-time employees. If you work at least 20 hours per week as a Non-Union active employee of 3M or one of its affiliated companies, you are covered by the plan.

What is the 3M life insurance benefit?

Like most other large employers, 3M automatically provides you with a base amount of group life insurance at no cost. This is commonly referred to as “Basic Life.” For most 3M employees, Basic Life is comprised of 1x (one times) your base salary plus planned AIP (Annual Incentive Pay) up to a maximum of $1 million.

Basic life coverage is guaranteed, which means you can skip a medical exam and detailed questions about your health when you enroll.

Can I get more life insurance through 3M?

As an active 3M employee, you can apply for Additional Life Insurance. Unlike the Basic Life insurance benefit, employees must pay the premiums for additional life insurance. At 3M, you can apply for additional life insurance with death benefit amounts equivalent to 1x salary all the way up to 10x salary. The costs for Additional group life insurance are picked up by the employee.

Do I need Group Life insurance?

If anyone is depending on the income you earn from your job, you should consider adding life insurance. There may be other reasons to own life insurance but meeting the needs of dependents is usually the first order of business. You’ll automatically receive the Basic Life insurance when enrolling for benefits.

How Much will 3M’s Additional Life Insurance cost?

Before applying for Additional Life coverage, we advise clients to check the open market. Your PrairieView Partners Advisor can provide you with premium quotes for term life insurance through an outside agency. In many instances, clients in relatively good health who don’t smoke will spend less on regular term life insurance purchased in the open market versus buying additional group life Insurance.

Example: We looked at the costs for Additional Life Insurance for Kelly K. a 50-year-old female, non-smoker living in Minnesota. Her total Compensation (salary + AIP) is $320,000/year.

Kelly K. has Basic Life insurance equal to $320,000. If she wants to add $290,000** of death benefit protection, her premium costs will be $32.22 per pay period (or, $386.64/year). We requested quotes for Kelly K. (preferred non-smoker risk class) from a general insurance agency and found that a 10-year term policy with a level premium would cost approximately $320 per year. Kelly K. would save over $66 per year in premiums, assuming she qualifies, by considering a term policy outside of work. Over 10 years, that adds up to $666 in total premiums saved. There’s also ability to keep her life insurance should she change jobs/leave the company (see below).

** Increments of additional life insurance may not be calculated based on your total compensation (base salary plus AIP). Multiples of additional life insurance are capped based on IRS limits for the year in which you apply for additional group life insurance. In 2021, the maximum compensation was $290,000.

What must I do to qualify for 3M’s Additional Life Insurance?

Unlike the Basic Life Insurance, you may need to answer some general health-related questions when applying for Additional Life Insurance. Whether or not you use tobacco is a central concern for insurance companies. Once you qualify for “Tobacco-free” premiums you will need to certify your tobacco status each year during open enrollment while you continue to include Additional Life Insurance as a benefit.

How much life insurance do I need?

Our need for life insurance tends to change over time. If you are in the early stages of your career, perhaps starting a family with a car loan and mortgage payment, you may need a higher amount of life insurance death benefit. If retirement is only a few years away and your debt obligations are relatively light, you should require less in the way of life insurance.

In our view, the best way to determine “how much is enough” is through a Life Insurance Needs Analysis. This is part of a long-term retirement projection – what we at PrairieView refer to as your Financial Roadmap. The projections consider all your available resources but assumes a pre-mature death. Then we determine how the remaining assets will support a surviving spouse/dependent. If available funds prove to be inadequate, adding more life insurance is often the best way to close the gap.

What happens to my 3M Group Life Insurance when I leave the company?

Another reason to look into term life insurance outside of work is the concept of “portability.” Unlike your 3M 401(k) plan, which stays with you, group life insurance through an employer is not designed to be taken with you when you separate from service. If you can get comparable pricing on term life insurance on your own – even if a bit more expensive – it may be worth considering for the portability feature.

What if my health isn’t so good?

Buying life insurance on your own involves an “underwriting” process in which the insurance company will assess their risk before issuing a policy. Applying for life insurance in the open market may include a health questionnaire, a review of your health records, and a medical examination.

A key feature of basic group life insurance is “acceptance.” There are no questions asked to receive basic life coverage. Applying for supplemental group life insurance may involve some assessment of your health and habits, but it usually isn’t as exhaustive as the application process in the open market.

If you have a pre-existing condition, or you smoke, group life insurance will likely be the more affordable option in the end.

Can I purchase life insurance on my Spouse/Domestic Partner?

If you are insured for Additional Life Insurance, you can include Dependent’s Life Insurance as a part of your benefits.

The amount of life insurance you can secure for a spouse/domestic partner is as follows:

$25,000;   $50,000**;   $75,000;   $100,000,   $200,000;   $250,000

** $50,000 is the “guaranteed issue” amount – the maximum amount of insurance an eligible spouse/partner can receive without proving insurability. Be sure to apply during open enrollment or within 31 days of getting married.

Can I purchase life insurance on my children?

Yes, you can. In the case of Kelly K., securing $10,000 of life insurance on a child would cost $1 per pay period, while a $20,000 insurance policy on a child would run $2 per pay period. $20,000 is the maximum insurance that can be obtained for a child. All child life insurance is “guaranteed issue,” and evidence of insurability is not required.

It’s never fun to think about our mortality. As advisors, we start with the optimistic assumption that each of us will live a full life expectancy, but we plan as though we could die tomorrow. Having the right amount and type of life insurance will bring peace of mind so we can focus on the other things that are important to us in life.

Next in our series on insurance – what is AD&D, and should I buy Pet Insurance?

Source: 3M Basic Life and AD&D Insurance Plan, Effective 1/1/2019
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Bo Aylin

Chief Compliance Officer

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