Group Life Insurance
Employer-sponsored life insurance provided as an employee benefit. Understand your coverage and whether you need additional protection.
What is Group Life Insurance?
Group life insurance is coverage provided by your employer as part of your employee benefits package. It typically offers a basic death benefit at little or no cost to you, with the option to purchase additional coverage.
Coverage is usually term life insurance and lasts only while you remain employed. Most policies don't require medical exams during open enrollment, making it easy to qualify.
How Group Life Works
Basic Coverage
Employers typically provide basic coverage equal to 1-2x your annual salary. This coverage is often free to employees.
Example: $60,000 salary = $60,000-$120,000 basic coverage
Voluntary/Supplemental Coverage
Option to purchase additional coverage (usually up to 5-8x salary) at your own expense through payroll deductions.
Rates based on age and sometimes health
Dependent Coverage
Many plans offer coverage for spouses and children (typically $5,000-$50,000 per dependent).
Available at low cost through employer plan
Advantages of Group Life
No Medical Exam
Guaranteed issue during enrollment
Free Basic Coverage
Employer pays for basic policy
Easy Enrollment
Simple sign-up during onboarding
Payroll Deduction
Premiums automatically deducted
Disadvantages
- • Coverage ends when you leave your job
- • Limited coverage amounts (may not meet your needs)
- • Not portable – can't take it with you
- • Coverage typically decreases or ends at retirement
- • Supplemental coverage gets expensive as you age
- • No cash value or investment component
Is Group Life Insurance Enough?
For most families, group life insurance alone is NOT sufficient. Financial experts recommend life insurance coverage of 10-12x your annual salary, but employer plans typically offer only 1-2x salary.
Example Gap:
- • Annual salary: $75,000
- • Recommended coverage: $750,000-$900,000
- • Typical employer coverage: $75,000-$150,000
- • Gap: $600,000-$825,000
When to Supplement with Individual Policy
You Have Dependents
Spouse, children, or others rely on your income
You Have Debt
Mortgage, student loans, credit cards need to be covered
You Plan to Change Jobs
Want portable coverage that goes with you
You're Young and Healthy
Lock in low rates now before health changes
Conversion Options
Important Feature: Most group life policies offer a conversion privilege that allows you to convert your coverage to an individual policy when you leave your employer (within 30-31 days).
Conversion typically doesn't require a medical exam, but rates will be based on your age at conversion and are often more expensive than individual policies.
Best practice: Buy individual coverage while employed and healthy instead of waiting for conversion.
Tax Considerations
Imputed Income
If your employer-provided group life insurance exceeds $50,000, the IRS considers the value of coverage above $50,000 as taxable income (called "imputed income").
Example: If you have $200,000 in employer-paid coverage, you'll pay taxes on the value of $150,000 in coverage.
Average Cost
Supplemental Group Coverage
$5-30/month
Per $100,000 coverage, varies by age
What coverage level do you need?
Choose the protection that matches your requirements