Is life insurance through work enough?

A woman in glasses wonders if her group life insurance through work is enough coverage to meet her needs

Life insurance through work—also known as group life insurance—is much like guaranteed issue life insurance and is a popular benefit offered by many employers that works similarly to an individual policy. While group life insurance through work can be an affordable start to creating a financial safety net for your loved ones, it often can be limited in coverage. In this article, we’ll help you figure out if your life insurance through work is enough.

What is group life insurance?

Group term life insurance is often offered to employees of a company as part of a benefits package. With group life insurance, the business that takes out the policy is the owner of the policy. Two types of group life insurance typically exist: basic and supplemental.

Basic group term life insurance is generally offered at little cost to the employee. Some companies also offer supplemental life insurance policies, which can provide additional protection at a reduced cost. These supplemental policies have a similar level of difficulty for approval and often offer only 3-4 times your annual salary.

When can I sign up for group life insurance?

The first opportunity you’ll likely have to sign up for group life insurance is when you first become an employee. Then, your employer should have an employee benefits open enrollment period—typically toward the last half of the calendar year—where you can sign up and make changes to your benefits, but you can also make changes to your benefits after a major life change, such as having a baby or getting married. The workplace open enrollment period is always a great time to reevaluate your life insurance needs and make any required changes. 

What are the benefits of group life insurance?

One of the great things about group life insurance is that qualifying can be easy. Unlike individual term life policies, group life insurance doesn’t take a particular person’s health history, age, or gender into consideration. Premiums are determined by the entire group and are usually less expensive, but often provide limited coverage. The convenience of being able to purchase a life insurance policy without researching can’t be understated, either.

When Group Life Insurance is Not Enough

While group life insurance is typically easy to qualify for, it often doesn’t provide the amount of life insurance coverage most people need. Group plans are limited in their coverage options, and relying solely on this policy could cost you in the long run. 

Unlike term policies purchased on your own, group life insurance coverage usually has a lower death benefit. The coverage usually only amounts to your annual salary or at the most, double. This may not be enough coverage for you or loved ones, since many financial experts recommend purchasing coverage that is 10x your annual salary.

Life insurance through your employer also only covers you while you’re still an employee at that company. If your next employer doesn’t offer life insurance — or your current employer chooses to discontinue the benefit— purchasing your own policy could be your only option. With the cost of life insurance rising as you age, not only will it likely be more expensive, but it also can be difficult to obtain coverage in general. 

Benefits of Purchasing Your Own Life Insurance Policy

Purchasing your own life insurance policy, especially a term life insurance plan, can give you flexibility in both price and coverage. If you have coverage through your employer, purchasing an individual life insurance policy along with your employer coverage can help you meet your coverage needs. 

One of the great qualities of term life insurance is predictability; you can trust that your insurance rate will remain the same for the length of the policy and budget accordingly. You can also easily make changes to your insurance policy as you get older and your life changes. Perhaps you need a basic 10-year term plan at the beginning of your career, and you want to explore more coverage options later on.

Even if your employer offers group term life insurance, it’s still worthwhile to carry an individual policy for added coverage. You can take your individual life insurance policy with you when you leave your job, unlike group life insurance, and be assured that your coverage will continue to provide for your loved ones.

Let SelectQuote find the right life insurance policy for you today. 

Most people have no idea how much life insurance they need, but our life insurance calculator will give you a headstart. Whether you want coverage to help supplement an employer-provided group life insurance policy or basic term life insurance to provide for your loved ones, let us help you find the right life insurance coverage for you.

We do the shopping. You do the saving.