Employee Benefits Open Enrollment Season for Group Life Insurance

A man asks his employer at work about his group life insurance policy while reading about his company's benefits package

As part of your company’s benefits open enrollment period, you may be offered group life insurance. Group life insurance is an affordable way to get basic life insurance coverage, but it’s not the only life insurance coverage option you have.

If you’re considering taking a group life policy with your employer, you should be aware of how it fits into your overall financial plan. Let’s explore the pros and cons of group life insurance through your workplace.

What is group life insurance?

Group life insurance is coverage often offered through your employer’s benefits package. Group term life insurance, however, differs from a traditional term life insurance policy in several key ways. For example, when employers offer a group life policy, it means that one contract provides coverage for an entire group of people. Instead of an individual—like you—owning the policy, it’s the company.

Employee life insurance is often offered as part of a one-year term and most (if not all) of the premium is typically covered by your employer. Policy coverage for workplace life insurance is also usually only 1x or 2x your annual salary. 

Benefits of Enrolling in Group Life Insurance

One of the biggest benefits of group life insurance is its affordability. Because premiums are partially (or totally) paid for by your employer, you can achieve a basic amount of coverage without paying a large amount of money.

In addition to low cost, group life insurance doesn’t usually require a medical exam for approval. Because you are part of a pool of people covered, factors such as medical history, age, and overall health aren’t taken into consideration. That makes it easy to get approved for this kind of policy.

There are situations where you may apply for supplemental life insurance coverage as part of your group life policy. In these cases, the insurance company may require you to undergo a medical exam.

What to Keep in Mind with Group Life Insurance

Unlike with other life insurance options, group life insurance through your employer only lasts as long as you’re working there. Once you leave, you can’t take the policy with you. In addition, sometimes employers will determine that life insurance is no longer a cost they want to absorb. They could decide to eliminate your group life insurance policy at the end of the coverage term, leaving the control of your coverage in their hands.

Without additional life insurance, you may not have enough coverage to provide for your loved ones if something unfortunate happens to you. Plus, the cost of life insurance increases as you age; by putting off buying insurance now, you’ll likely face higher costs down the road.

Because group life insurance terms tend to be one year, prices could increase year over year and be impacted by the range of employees covered. Compare this to a traditional term life insurance policy with increments of 10, 15, 20 or 30 years, whose prices are consistent for the duration of the policy. Options for group life insurance coverage are also more limited: you’ll only be able to work with one carrier, chosen exclusively by your employer. 

How much life insurance do I need?

The recommended amount of life insurance is 10x your annual salary. Most employer sponsored life insurance policies only provide 1-2x your annual income, making this amount of insurance coverage fall far below the recommended amount. Would the death benefits offered by your group life policy be enough to cover your mortgage, student loans, other existing debts or provide for your loved ones after you pass away?

To help figure out just how much insurance you need, it’s best to consider your current circumstances and any financial decisions you may want to make in the immediate future. Our life insurance calculator can help you figure out how much life insurance coverage is right for you.

Your Life Insurance Policy Options

If you’re thinking of buying your own life insurance policy outside of your employer-provided coverage, you’re not alone. By purchasing life insurance as an individual, you won’t be tied down to your workplace coverage and will have the opportunity to compare policies and rates from multiple companies at once to find the right one for you.

You could buy term life insurance that’s known for its affordability or a whole life insurance policy that you’ll have access to for the rest of your life. This lets you budget for coverage and have peace of mind that your loved ones will be provided for if something happens to you. 

Worried about approval due to health concerns? Consider no medical exam life insurance.

Let SelectQuote find the best life insurance for you.

Relying completely on employer provided life insurance could give you less than adequate coverage. Between the lack of choice and the lower benefit amounts, it’s possible that you may not be able to fully provide for your family after you’re gone. Plus, there’s a chance you could find more affordable rates for more coverage by going with an individual life insurance policy instead.

At SelectQuote, our licensed insurance agents can walk you through all your options for life insurance coverage and help you compare policies from some of the most trusted insurance companies in the nation. Get started on your free life insurance quote today.

We do the shopping. You do the saving.