Group Life Insurance - Why It Is Not Enough On Its Own

August 27, 2021

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Life insurance comes in various shapes and forms, from temporary term life insurance coverage to more permanent whole life plans. Americans can buy  insurance from companies, like us, and get group life insurance from their employer.

This then raises the question, "Why should I buy life insurance if I can just get a group plan from work?" While you can certainly use your company plan, in the long run, you could be severely limiting your options and leave yourself without adequate coverage.

This week, we're looking at employee group life insurance and why it may seem like a quick and easy coverage option, but in reality, it won't be enough.

What are group life insurance and group term life insurance?

As we touched upon above, employers offer group life insurance is coverage offered to their employees. Employers typically offer this form of insurance after a certain amount of time when you're hired on. These plans are also relatively inexpensive or offered free, depending on the company. While both permanent and term plans are available from a company, most employers only offer term.

The plan provided by your employer can be useful to you and your loved ones. But it's a mistake to solely rely on it for coverage. There are a number of important factors that you should be aware of when it comes to only having your work's life insurance plan in place for your family's protection.

It may not be enough

Employee life insurance packages generally have a lower face value that may not be ideal for most people, especially those with families. The best coverage amount for your insurance should typically be anywhere from five to ten times your annual salary in order to help protect your family from covering any final costs.

Your employer's group life insurance is not specifically tailored to individual needs. Group plans are created with a range of people in mind, which means rates are determined by groups of employees, and the coverage is more basic overall.

The limited coverage offered by a group plan often can't be customized to fit your needs. You cannot add additional riders or even increase your coverage amount. So you may get coverage at no cost, but the protection typically may not be higher than $25,000.

Coverage tied down to your workplace

Life insurance provided by your employer is typically only in effect as long as you remain an employee. So, if you have to change jobs for whatever reason, your coverage won't move with you. So if you're temporarily laid or lost your job, you are left without coverage.

Holding off on getting your own coverage while working or in between jobs is a large gamble. Doing this can end up hurting the financial future of your loved ones. Don't wait for your next job to get insured again. Waiting could leave you without coverage when your family needs it most. Finally, different workplaces have different employee coverage options. This means you can come across an employer that offers little to no coverage when compared to your last job.

No choices & coverage is not guaranteed 

Your employee plan is based on a group plan that the entire workplace uses, providing you with stricter coverage. Generally, with these types of plans, you get little to no choice on how the insurance is structured. You also typically have no say on what additional benefits, if any, are available to be added to the plan. It's great that employers provide coverage, but it's not going to be tailored to each worker's specific needs.

Another issue with employer-provided life insurance is that it is not always guaranteed to remain in force. You could be comfortable with the coverage you have now, but a year later it could be different. Your employer could cancel the plan because of budget cuts, or the amount of protection could go down. If this happens, you could be left with no insurance or a severely lowered amount of coverage.

There may be some exclusions

The final reason to not solely rely on your workplace-provided life insurance is that there are often exclusions that limit the protection. Ensure that the coverage you get at work doesn't just cover you in the event of a job-related accident. Your coverage should work for you wherever and whenever you are and be enough to help those who matter most when the worst happens. Before you decide to purchase more life insurance, it's a good idea to check the exclusions in your work plan.

Ready for more beneficial life insurance coverage?

Employee plans have their benefits, but on their own, they cannot provide the comprehensive coverage you need. At, we specialize in affordable term life insurance plans. Our coverage provides reliable financial security that can work with any budget. You can choose between 10-year term , 20-year term , or 30-year term coverage options, so there is always a plan for any financial need.

We don't require you to visit your doctor, meet face-to-face with advisors, or complete mountains of paperwork to apply for a plan. Please complete our short free quote form now if you are ready to learn more about your term life insurance options and get free no-obligation quotes!


Written by: Adam Bianco

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