Employer-Provided Term Life Insurance

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.

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Tim is a licensed life insurance agent with 23 years of experience helping people protect their families and businesses with term life insurance. He writes and creates stuff for QuickQuote and other insurance and financial websites.

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Written by Tim Bain
Founder & Life Insurance Agent Tim Bain

Benjamin Carr was a licensed insurance agent in Georgia and has two years' experience in life, health, property and casualty coverage. He has worked with State Farm and other risk management firms. He is also a strategic writer and editor with a background in branding, marketing, and quality assurance. He has been in military newsrooms — literally on the frontline of journalism.

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Reviewed by Benji Carr
Former Licensed Life Insurance Agent Benji Carr

UPDATED: Jul 19, 2021

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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.

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