Employer-provided group life insurance is a wonderful thing, but its just not enough on its own. You can have more than one life insurance policy, and these group life insurance plans are an excellent, inexpensive way to supplement your individual policy. What you shouldn’t do is rely on your employer’s plan as your main source of protection.

3 Reasons Why Your Employer’s Life Insurance Plan Is So Great

1) You are automatically approved upon hiring.

This is a big deal. Even if you have a major medical issue like diabetes, epilepsy, a history of cancer, etc you are still enrolled in the plan.

2) Your family has your end-of-life expenses taken care of.

Most of the group insurance plans I have seen offer enough coverage to pay for end-of-life expenses. While you are still actively working this is a great fringe benefit. Your personal life insurance total should always include enough to also cover end-of-life expenses, but a free plan from your employer gives it a little extra bump.

3) Did I mention that it is usually free or super inexpensive?

Life insurance coverage for free is a beautiful thing. Now, nothing in life is perfect, and that includes employer paid life insurance. It cannot be your main source of protection because of its limitations. You need to have your own individual policy as your family’s first line of defense. It is a guaranteed way to financially protect them in the case of your untimely demise.

The 3 Ways That Individual Life Insurance Picks Up The Slack From Employer-provided Life Insurance:

1) You can’t take an employer plan with you without paying more, but your individual plan has a locked in, level price.

If you want to take your group life insurance policy with you, most of them require you to convert your group policy into a more expensive permanent policy. This increases the cost a great deal, and it can make the policy too expensive to keep. If you find yourself in this position you can usually do better on your own with a broker. To keep yourself out of this position, buy your own individual policy soon. The earlier in life you buy one, the more affordable it gets. Research your group policies conversion rules, get the facts and protect yourself.

2) Your employer’s plan is usually not enough, but you can customize your individual plan to meet your needs.

Should you ever turn down the free life insurance your employer offers you? Absolutely not, you can have your employer’s policy PLUS an individual policy or two. The problem is that it is often not enough. Most of us get a moderate policy as a token of appreciation. However, it can be a supplement to your individual policy. Run the numbers and find out what your family needs if you were to pass tomorrow. Use that as the basis for your individual policy.

3) Not every employer has it, but your individual plan stays with you through all of your career changes.

If you are like most Americans, you have switched jobs once or twice in the past, and you will probably do it again. Even if all your previous employers offered generous life insurance plans, you cannot count on your next employer doing the same. Plus, when you retire you will have to decide on how to carry on your life insurance. Buy your own individual life insurance policy, and just use the employer plans as supplemental policies.

The Takeaway

Thank your employer for their life insurance plan, they are doing you a huge favor, but then put pencil to paper and figure out how much your loved ones will need if you were to pass tomorrow. Talk to your local broker, ask for the life insurance expert, and schedule a sit-down meeting to talk about your individual policy. Bring all of your information on your group life insurance policy, your monthly budget, and your financial portfolio. The broker’s expert will advise you on what type of policy, or combination of policies, best fits your financial needs and goals. Next, they will shop around and find you the best price. If you are in the Twin Tiers, that makes me your guy. If you feel comfortable doing business remotely and you are anywhere in the USA, our team will more than likely be able to help you (I personally handle PA and NY). The younger you are when you do this, the more you will save in the long run.

Bankrate.com has a handy life insurance calculator. FYI – I would put in $15,000 for funeral expenses, that bumps you just above the average for a funeral at current prices. If you are under 40, I might even go higher.


You can email me at slambert@gannonassociates.com or ask for me when you call our offices at (570) 297-2128.

-Stevens Lambert, Producer at Gannon Associates