Employer-Provided Life Insurance [2024]

While it may seem like a good deal to have employer-provided term life insurance, you may want to consider some factors before buying an employer-provided life insurance policy. Employers often provide a small amount of life insurance coverage for free, but it may not be enough. You may want to explore options to buy supplemental group life insurance, which allows workers to buy extra coverage. Use our free comparison tool below to start comparing term life insurance quotes now.

UPDATED: Nov 27, 2023Fact Checked

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Eric Stauffer

Licensed Insurance Agent

Eric Stauffer is an insurance agent and banker-turned-consumer advocate. His priority is educating individuals and families about the different types of insurance coverage. He is passionate about helping consumers find the best coverage for their budgets and personal needs. Eric is the CEO of C Street Media, a full-service marketing firm and the co-founder of ProperCents.com, a financial educat...

Licensed Insurance Agent

Schimri Yoyo

Licensed Agent & Financial Advisor

Schimri Yoyo is a financial advisor with active life and health insurance licenses in seven states and over 20 years of experience. During his career, he has held roles at Foresters Financial, Strayer University, Minnesota Life, Securian Financial Services, Delaware Valley Advisors, Bridgemark Wealth Management, and Fidelity.  Schimri is an educator eager to assist individuals and families in ...

Licensed Agent & Financial Advisor

UPDATED: Nov 27, 2023

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Editorial Guidelines: We are a free online resource for anyone interested in learning more about life insurance. Our goal is to be an objective, third-party resource for everything life insurance-related. We update our site regularly, and all content is reviewed by life insurance experts.

UPDATED: Nov 27, 2023Fact Checked

So you’re considering taking the supplemental term life insurance offered by your employer this year. Why not? It’s cheap and easy, right? Well, not so fast. While it may be a good deal for some, you may want to consider the following factors in your decision.

  • Cost – This is usually the first consideration, and rightfully so. We all have other things we’d rather spend our hard-earned money on. And while the monthly payroll deduction may be enticing, it could end up costing you in the end.

The reason? Take a look at the guy in the cubicle next to you. You know, the one who sneaks outside every 15 minutes or so for a quick cigarette and conveniently stops by the breakroom on every other trip for another Krispy Kreme donut. Well, chances are good that you are helping pay for his future heart attack in the form of higher life insurance premiums. That’s right … healthy employees subsidize the unhealthy ones. In most plans, the premiums are blended so that all employees pay the same premium, regardless of health or other factors (except coverage amount). So you may actually be paying more than you would if you purchased your own policy privately.

  • Security – We’re talking the job kind here. What happens to your life insurance coverage if you lose your job? That could depend on the company’s plan. Some plans allow employees to convert their coverage into a personal policy and take it with them. While that sounds good on the surface, we must dig a bit deeper to determine if it really is as it sounds. For example, the convertibility may depend on the reason for termination. It’s more likely you could convert your policy if were are laid off as opposed to being fired for misconduct or other reasons.

Another consideration is the cost of conversion. The cost of most policies increases significantly once converted. While that’s not always the case, you will want to ask for a quote before signing up.

So employer-provided term life insurance may not necessarily be as good a deal as it seems, once you consider these important factors. However, it can be good for some; like the guy in the next cubicle with the perpetual jelly stain on his tie.

Case Studies: Employer-Provided Life Insurance

Case Study 1: The Healthy Employee

John, a healthy employee, considers enrolling in his employer-provided term life insurance. However, he realizes that the premiums are blended, meaning he would be paying the same premium as his less healthy coworkers. This case study highlights the potential financial implications for healthy employees subsidizing the unhealthy ones.

Case Study 2: The Cost of Conversion

Sarah, is contemplating employer-provided life insurance. She discovers that the cost of most policies increases significantly once converted. This case study emphasizes the importance of requesting a quote before signing up for an employer-provided policy.

Case Study 3: The Perks and Drawbacks

In this case study, Mark evaluates the pros and cons of employer-provided life insurance. He recognizes that while it may seem like a good deal initially, there are important factors to consider. Mark’s case study delves into the potential drawbacks and benefits of employer-provided policies.

Frequently Asked Questions

What is employer-provided life insurance?

Life insurance offered by employers as a benefit.

Is the coverage enough?

It may not be sufficient. Consider additional coverage.

Can I buy extra coverage?

Yes, through supplemental group life insurance.

Any drawbacks to employer-provided life insurance?

Healthy employees may pay more for unhealthy coworkers. Conversion costs may increase.

Should I get my own policy instead?

It can offer more flexibility and tailored coverage.

Your life insurance quotes are always free.

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Eric Stauffer

Licensed Insurance Agent

Eric Stauffer is an insurance agent and banker-turned-consumer advocate. His priority is educating individuals and families about the different types of insurance coverage. He is passionate about helping consumers find the best coverage for their budgets and personal needs. Eric is the CEO of C Street Media, a full-service marketing firm and the co-founder of ProperCents.com, a financial educat...

Licensed Insurance Agent

Schimri Yoyo

Licensed Agent & Financial Advisor

Schimri Yoyo is a financial advisor with active life and health insurance licenses in seven states and over 20 years of experience. During his career, he has held roles at Foresters Financial, Strayer University, Minnesota Life, Securian Financial Services, Delaware Valley Advisors, Bridgemark Wealth Management, and Fidelity.  Schimri is an educator eager to assist individuals and families in ...

Licensed Agent & Financial Advisor

Editorial Guidelines: We are a free online resource for anyone interested in learning more about life insurance. Our goal is to be an objective, third-party resource for everything life insurance-related. We update our site regularly, and all content is reviewed by life insurance experts.

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