Here’s what they don’t tell you about employer-provided life insurance policies…
💼 What Is Group Life Insurance?
If your job offers life insurance, it’s likely what’s called group life insurance — a benefit included in many workplace packages. It’s usually free or low-cost, and provides a set amount of coverage, typically 1–2x your annual salary. So, Do you need life insurance outside of work coverage?
Example:
If you make $60,000, your work policy may provide a $60,000–$120,000 death benefit.
Sounds like a great perk, right?
Well… yes and no.
Let’s talk about why it might be enough — and why it often isn’t.
🚩 5 Reasons Group Life Insurance Is NOT Enough
❌ 1. You Lose It When You Leave the Job
Group policies aren’t portable. That means if you:
- Change jobs
- Get laid off
- Retire
👉 Your life insurance goes away.
This is a huge risk if:
- You’re older
- You develop health issues
- You’re no longer insurable
Trying to buy life insurance after you lose your group plan could mean:
- Higher premiums
- Medical disqualification
- Or no coverage at all
❌ 2. It’s Probably Way Less Than You Need
Most people should have 10–15x their annual income in life insurance to truly protect their families.
Let’s break that down:
| Income | Minimum Recommended Coverage | Typical Work Coverage |
|---|---|---|
| $50,000 | $500,000 – $750,000 | $50,000 – $100,000 |
| $80,000 | $800,000 – $1.2 million | $80,000 – $160,000 |
| $100,000 | $1M – $1.5 million | $100,000 – $200,000 |
If you’re the main provider for your family, work coverage alone won’t even scratch the surface.
❌ 3. No Customization or Riders
With most employer-sponsored plans, you can’t add:
- Living benefits (early payouts if you get sick)
- Waiver of premium (if you become disabled)
- Child riders
- Return of premium
- Cash value components (like IULs or whole life)
In short: you get what they give you.
And often, that’s the bare minimum.
❌ 4. Supplemental Life Through Work Isn’t Always a Deal
Your employer may offer supplemental coverage you can buy — often up to 3–5x your salary.
But here’s the catch:
- You’re usually not medically underwritten
- Premiums increase with age
- If you’re young and healthy, you’ll likely get a better rate on your own
And again… you lose this coverage if you change jobs.
❌ 5. You Don’t Own It
This might be the biggest one.
Your employer owns the policy — not you.
That means:
- You have no say in changes
- You can’t access the benefits directly
- You have no control over if it gets canceled or altered
If your company decides to change providers or eliminate life insurance benefits altogether — you’re out of luck.
✅ Why You Should Own a Private Life Insurance Policy
Now let’s talk solutions.
Even if you get coverage at work, it’s smart to have your own policy. Here’s why:
✔️ 1. You Can Take It With You
A personal policy is yours forever — as long as you pay the premiums.
- Move jobs? Still covered.
- Become self-employed? No problem.
- Retire early? You’re good.
This stability alone makes personal coverage a must.
✔️ 2. You Control the Amount
You’re not stuck with just 1x your income. You choose:
- $250,000?
- $500,000?
- $1 million or more?
You can customize it to match your goals — mortgage payoff, debt coverage, income replacement, kids’ education, final expenses, or all of the above.
✔️ 3. You Lock in Lower Rates While You’re Young
The younger and healthier you are, the cheaper your premiums will be — for the life of the policy.
You can lock in 30 years of coverage at a low monthly rate that never changes.
Waiting until later could mean:
- Paying 2–3x more
- Getting denied coverage
- Settling for less coverage
✔️ 4. You Can Add Powerful Riders
Unlike work policies, personal life insurance gives you add-ons like:
- Living Benefits: Get access to money if diagnosed with a terminal illness
- Waiver of Premium: Stop paying premiums if you become disabled
- Children’s Rider: Add your kids under one plan
- Return of Premium: Get your money back if you don’t die (on select policies)
This makes your life insurance work harder for you — not just your beneficiaries.
✔️ 5. It Can Build Wealth Over Time (With the Right Policy)
If you choose a permanent policy like an Indexed Universal Life (IUL), you get:
- Lifetime coverage
- A tax-advantaged cash value account
- The ability to borrow against your policy
- Access to money while still alive
This turns life insurance from an expense into an asset.
🔄 Combine Both for Maximum Protection
Here’s the ideal approach:
✅ Take your work coverage — it’s free or cheap
✅ Buy your own policy — to make sure your family is fully protected
This combo gives you the best of both worlds:
- A cushion from your job
- Real, long-term control from your own policy
📉 What If You Rely Only on Work Coverage?
Let’s imagine the risk:
- You’re 38.
- You lose your job.
- You get diagnosed with a chronic condition.
- You try to buy insurance… and get denied or face $200/month premiums.
Now your family has no coverage — and no backup plan.
This is exactly what personal life insurance prevents.
🧮 How Much Coverage Do You Actually Need?
A quick rule of thumb:
[Annual income] × [10–15 years] = Target life insurance amount
Then subtract your group coverage from that total.
📊 Real-Life Example:
- Your salary = $80,000
- Target coverage = $800,000 – $1.2M
- Work insurance = $160,000
👉 Coverage gap: $640,000 – $1,040,000
That’s what you should fill with a term policy or IUL.
🧠 Bottom Line: Should You Buy Additional Life Insurance?
YES — even if you get coverage through work.
Because:
- You don’t own that policy
- You’ll lose it if you leave
- It’s probably not enough for your family
- You miss out on the benefits of customization and long-term savings
The peace of mind from owning your own policy is worth every penny.
✅ Key Takeaways
- ✔️ Employer life insurance is helpful, but limited
- ✔️ You should have personal coverage that stays with you no matter what
- ✔️ Use your job policy as a bonus — not a full solution
- ✔️ The earlier you act, the more you save and the more secure your family is
📝 Ready to Take the Next Step?
If you’re ready to explore policies you can actually count on — ones that stay with you no matter where life takes you — check out our resources on:
- Choosing between term and IUL
- How much life insurance you really need
- Contact Us If You’d Like to Speak with a Licensed Broker
Your future self (and your family) will thank you.