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Is It Better To Get Life Insurance Through My Workplace Or Independently?


Life insurance is part of the benefits package many employers offer their employees. This coverage can also be purchased independently. Buying life insurance through an employer can have both advantages and disadvantages for the policyholder.

Pros and Cons of Getting Life Insurance Through the Workplace


Many employers offer a small amount of life insurance, known as basic group life, as a benefit to their employees. This coverage is free and guaranteed. You only need to sign up for it, or enrollment may be automatic. Typically, coverage under a basic group life insurance policy only amounts to $25,000, $50,000, or the employee’s annual salary rounded to the nearest $1,000. In many cases, employees have the option to purchase supplemental group life insurance, with coverage that could amount to three to four times their annual salary. There are several advantages to buying this type of life insurance:

  • Convenience: Many people would like to purchase life insurance to protect their families, but haven’t yet gone through the process. Buying supplemental coverage through the workplace is an easy way to get this done.
  • Affordability: Supplemental group life insurance may be available at lower rates than you could find if you shopped around independently.
    Acceptance: If you have a medical condition, it could significantly affect your life insurance rates. You may qualify for much better rates through a group policy. You may have to fill out a questionnaire, but typically, a medical exam is not required.

Along with the advantages, there are certain disadvantages to tying your life insurance to your employer:

  • Career changes: Most people do not stay with one employer for their entire career. If you leave your job, your group life insurance policy does not travel with you. You may be able to convert it to individual life insurance, but the cost could be significantly higher. Group life insurance may not be a benefit your next employer offers. In that case, you have the option to shop for an individual policy, but the older you get, the more the rates go up, and you could develop a medical condition in the meantime.
  • Limited coverage: You may need more life insurance than you can purchase through the workplace. If that is the case, you can buy regular term life insurance in addition to or instead of supplemental group life insurance.
  • Limited policy options: You will not have the full range of policy options if you buy life insurance through your employer. However, most employers offer term life insurance, which is more affordable and the best choice for many people. If you want whole life insurance, our agent can help you find a policy that suits your needs.

Which Way to Go?

If you can buy life insurance independently at comparable or slightly higher rates than the supplemental coverage available through work, that is probably the better option because of its portability. On the other hand, if you have a medical condition and may not qualify for affordable rates individually, supplemental group life insurance may be the best way to go. Consult with our friendly agent for guidance on this crucial issue.

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