Hope for your financial life and beyond

Is My Employer-Provided Life Insurance Enough?

Enjoy this post today from Natasha as she shares how employer-provided life insurance plans stack up against an individual policy purchased on the open market.

If the company you work for offers group life insurance, be sure to take advantage of this great benefit. Employers are not required to offer life insurance, so if yours does be sure to count your blessings. While having group life insurance is a nice bonus, it would still be wise to consider purchasing additional life insurance on yourself.

Employer-sponsored group life insurance policies are different than individual life insurance plans in these ways:

  • There are no medical exams
  • They are designed one-size-fits-all
  • They have less individual coverage
  • They only are in affect while you work for that company

To purchase an individual life insurance policy, you typically need to undergo a medical exam. The life insurance company uses your exam results as one of the determinants of how much your policy premiums will be. The healthier you are, the more inexpensive your premiums.

If you are purchasing additional employer-sponsored life insurance beyond the amount most employers provide, compare these insurance costs to individual plans. You can see these individual life costs by getting a free term life insurance quote. You may be pleasantly surprised.

Employer-sponsored group plans offer the same amount of coverage at the same rate, regardless of the individual’s health. This may sound ideal, and it is a great employer benefit, but there are a few problems with relying solely on your company’s life insurance plan.

Employer-sponsored life insurance plans are designed to cover a large group and are planned as a one-size-fits-all package. They may not include any life insurance policy riders that would benefit you and your loved ones such as child riders, spousal riders, long-term care riders, or accelerated death benefit riders. A great benefit of having individual life insurance is how customizable it is for your unique situation. Life insurance through your work does not take your individual situation into consideration.

Most employer-sponsored life insurance plans only pay for coverage that is one to two times your salary. While this extra amount is helpful to your loved ones if you died, it will not last much more than a year or two. The standard recommendation of life insurance coverage is 10 times your annual salary; this is not the perfect number for every family, but employer-sponsored plans do not come close to this coverage amount.

Many people don’t realize that you can only collect on your group life insurance policy if it’s in force and you are employed with that company when you die. However, if you get sick or injured and are in the hospital long before you pass away chances are that you were terminated from the company. Many employer benefits contracts state that they will discontinue your benefits (including your life insurance policy) and terminate your employment if you are not able to make it to work after a month or so. Not only are your loved ones emotionally and physically devastated from your death, but they then find out you no longer have a life insurance plan in place and are also financially impacted.

Let’s say you were diagnosed with cancer and were in the hospital for a long period of time, but fought it and survived. You can rejoice that you are still alive to be with your loved ones, but your employment was still terminated. You now have to look for a new job. Maybe the next employer doesn’t offer life insurance. In this case, you will have to shop for life insurance on your own but now have a pre-existing condition which means life insurance may now be much more expensive or even unavailable.

Another situation when relying solely on your group life insurance policy could go wrong is if you are laid-off or if the company goes out of business. Say you are 55 years old and never purchased individual life insurance because you thought you were safe having it only through your employer. If the company goes out of business or starts laying people off, you are now 55 and have no life insurance.

Your health and age play a huge role in determining the price of life insurance. The last thing you need to worry about as you get closer to retirement age is trying to find affordable life insurance. Again, your age and health play a big role in purchasing life insurance, so the sooner you buy life insurance the cheaper it will be.

Life insurance is a lot more affordable than most people think. According to LIMRA, consumers overestimate the cost of life insurance by nearly three times. Term life insurance is the most affordable way to protect your loved ones financially should something happen to you.

Example: A 30-year old non-smoking male can pay as little as $35 a month for a 30-year term policy with $500,000 worth of life insurance coverage to protect his family’s standard of living in case something unexpected happened to him.

Life insurance should be included in most financial plans. No one ever anticipates needing to use life insurance, but the unexpected happens. Make sure your loved ones are protected from financial disaster by being prepared. You can see how little it would cost you by getting a free and anonymous term life insurance quote today. This is one thing that you may wish you didn’t put off until tomorrow.

Questions: Do you have life insurance through your company? When did you purchase our first life insurance policy?

Author Bio: Natasha is the Marketing and Social Media Coordinator for Quotacy, an online life insurance agency for the modern consumer. When not at work, you can typically find her volunteering at the local Animal Humane Society or curled up on her couch watching Netflix… unless it’s football season, then the Packers game will be on. You can connect with Natasha on LinkedIn.

I hope you enjoyed that post. Want more?
Sign up to receive my blog posts via email and get your free gift...
99 Ways to Spend Less and Save More

Privacy Guarantee: I will not share your email with anyone.


  1. Jayson @ Monster Piggy Bank says

    This is one of the things I checked out in my employer if the life insurance is good enough because this is one reason for me to stay for more years.

  2. We are self insured as the top limits of my employer do not provide enough coverage in the event that something were to happen.

  3. Need to keep in mind if you are no longer employed by that company, you only have a 30 day grace period on that insurance. Always a good idea to self-insure.

Speak Your Mind