Group life insurance is a life insurance policy offered to a group, most commonly employees of the same company, or members of a labor union or professional association. While this can be a great benefit, the amount of group life insurance that’s offered through work or an organization is typically less than what most people need. That’s why many people choose to add an individual life insurance policy in addition to group coverage.
How to evaluate your group life insurance benefits
Most people first encounter group life insurance plans when enrolling in employee benefits. Life insurance for employees often comes at no additional cost, and employee group life insurance policy benefits are typically equal to one or two times your salary.
Some companies offer an option for employees to add on to their group life insurance policy for an additional cost.
Pros & cons of group life insurance
Pros of group life insurance
Premiums are usually free or inexpensive for employees.
No medical exam is required.
Cons of group life insurance
Group life insurance coverage may not be enough, particularly if you have dependents who rely on your income.
Life insurance for employees lasts only as long as you stay with the same employer, and, if it’s even an option, converting the group life insurance policy to an individual policy usually costs more than buying an individual policy directly.
Group life insurance is most likely to be term life insurance, so even if you keep your job for your whole life, the coverage will end at some point.
Alternatives to group life insurance
Individual term life insurance
Term life insurance can be a budget-friendly option when you need a large death benefit. Term life insurance is temporary, meaning that if you don’t die during the term, the coverage will end someday. But the coverage doesn’t lapse when you change jobs.
Individual whole life insurance
Whole life insurance offers coverage for your lifetime as long as you pay required premiums, and it also accumulates cash value, which grows over time.
When you buy an individual policy, you can tailor your premiums and coverage to fit your needs. Once you get a whole life insurance policy, it can stay in place for your entire life, with no additional medical exams required.
Adding on to your group life insurance
If you have a group life insurance policy that doesn’t provide the level of coverage you need, it can be a good idea to supplement it with an individual life insurance policy. As long as the group life insurance policy is provided as an employee benefit at either low or no cost to you, it doesn't hurt to keep it.
A financial advisor can help you review and compare your group life insurance with other available insurance options.
Life Insurance Calculator
Get an estimate of how much coverage makes sense for you.