Is Employer Life Insurance Enough?

Man looks over his employer life insurance paperwork.

Photo by RDNE Stock Project on Pexels.

For many Americans, having employer life insurance is a good benefit, especially if there is no other life insurance policy to their name. They can receive some form of comfort knowing that they have coverage in case the worst should happen.

Employer-provided life insurance is group term life insurance that employers may offer in your employee benefits package for all the company workers. The coverage amount at larger companies is a multiple of the employee’s annual salary. And at smaller companies, it may be a set amount. It is also important to note that this coverage only applies to the employee, not their spouse or children.

So, is it enough? Read further to learn the pros and cons of this type of life insurance and why it may or may not work for you.

The Pros

It’s free (or very cheap). One of the best benefits of your employer-provided life insurance is that it is usually free. And if there is a cost, it is very little because your employer would take the brunt of the premium payments.

No medical exam. If you are offered life insurance from your employer, it is regardless of your health status. So, if you do have any health conditions, this is a solid option for you because life insurance policies go through medical underwriting and can be hard to get on your own.

Convenient sign-up. When you search for life insurance on your own, you must go through a process of receiving multiple quotes, scheduling medical exams, and working with other legal entities. However, for an employer-provided policy, you only fill out a few forms and select a beneficiary.

The Cons

Not enough coverage. The usual employer-provided life insurance policy coverage is about two or three times the employee’s annual salary. However, most people need way more than that to secure their family’s financial future, especially if they have dependents or debt. Some experts even recommend getting a policy with 10 to 15 times your annual income coverage. So, it is safe to say that employer life insurance is not enough.

Supplemental coverage can be more expensive. You do have the option through your employer to get supplemental coverage. And while that is convenient, it can result in more expensive costs than if you worked with an agent to buy your own life insurance policy.

No job, no coverage. So, it should be no surprise that your employer-provided life insurance is only viable when you are under that employer. You will automatically lose your coverage if you switch jobs, retire, or get laid off. If your employer stops providing group life insurance, you can be affected. If any of those were to happen, you would need to go out and buy your own coverage, which can prove difficult if you are older or have developed a health condition.

Life Insurance Questions?

We hope that this information on employer life insurance is useful to you.

If you’d like to learn how we can help you plan your retirement, call Empower Brokerage at (888) 539-1633 to speak to one of our Life and Annuity experts or leave a comment down below.

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About Kayla Gonzalez

Kayla is a graduate of Texas A&M University and joined the Empower Brokerage marketing team in early 2021. She creates content for the company websites and assists with various marketing campaigns. LinkedIn Profile

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