Wondering whether to get group life insurance through work? It’s a nice perk, but it may not be enough to cover your family when it counts. In fact, it’s a good idea to consider getting life insurance coverage outside of your employer. Here’s what you need to know about group life and individual term life insurance options. 

Should you buy life insurance through your employer?

Employer-provided insurance, or group life, is a policy you can buy through your workplace. Company-paid group life insurance is the most common type of insurance benefit, according to an industry study, with 85% of companies offering it to their workers.

Group life typically comes in two varieties: basic and supplemental.

• Basic group life insurance is typically a smaller policy with pre-set coverage options and limits that is often paid by your employer. Coverage amounts are smaller and tend to range from $25,000 to several times your annual salary. You can also name a beneficiary for your payout, and coverage is generally guaranteed. Since it’s usually low cost or free, it makes sense to accept it from your company.
• Supplemental group life insurance, an option offered by 80% of companies, simply comes down to extra coverage. With supplemental plans, you can usually buy coverage up to three or four times your salary and may need to fill out a health questionnaire to qualify.

One of the upsides of group life is that it’s often low-cost or even free, since your employer subsidizes most of the cost. With no medical exam and guaranteed acceptance in many cases, life insurance through work is also easy to qualify for and buy. But if you’re counting on your employer’s life insurance as your primary form of coverage, keep these caveats in mind:

• It stays with the job. Unfortunately, this type of plan usually requires you to stay employed by the company to keep your coverage. That means if you change jobs – something 21% of millennials have done in the last year – you could end up unprotected. With unemployment levels rising, an unexpected layoff could also leave you without coverage.
• Limited options. Employers usually offer a standard one-size-fits-all plan, which may not work if you have specific medical needs or need more flexible life insurance.
• Lower coverage amounts. On average, households with just a group life insurance plan have $225,000 less in coverage than they need.

What are the benefits of term life vs employer’s life insurance?

Buying your own individual term life policy from an insurance company to supplement group life is often a smart move. The most popular and affordable choice for life insurance, term life insurance plans provide coverage for anywhere from 10 to 30 years. If you die during that time, your family will receive a cash payout to replace your income, cover the mortgage, pay down credit card debt, or use however else they need.

With an individual term life policy, you can stay covered if you change jobs and customize coverage to your needs. If you’re in good health, an individual plan is also often more affordable than a similar group life policy.

Making the right choice when it comes to choosing a reliable life insurance company is easier with Fidelity Life. We’re here to answer your questions and walk you through your options. Start your quote or give us a call today.

At Fidelity Life, our goal is to make life insurance simple, affordable, and understandable for everyday families. This content is intended for educational purposes only. Each post is carefully fact-checked, reviewed, and updated regularly to ensure the information is as relevant as possible.