Is Company Group Life Insurance Enough?

Employers often include company life insurance in their benefits packages to attract and retain talent. Company life insurance, or employer-provided group life insurance, is a group term life policy that an employer purchases for eligible employees, typically offering coverage at little or no cost. According to the U.S. Bureau of Labor Statistics, 82% of large companies offer group life insurance to employees.¹ 

LIMRA’s 2025 Facts About Life Insurance and Workplace Benefits survey reports that about half of employees expect their workplace coverage to meet their life insurance needs.² However, understanding how employer-provided life insurance works can help employees see where gaps may exist. Let’s start with the most important question. 

In this article:

How much life insurance coverage do you need?

How does employer life insurance work?

How to supplement employer-provided life insurance

When employer-provided life insurance may not be enough

Frequently asked questions (FAQs)

How much life insurance coverage do you need? 

The amount of life insurance coverage you need depends on your financial responsibilities and short or long-term goals. Consider how much money your loved ones would need for the following expenses: 

• Income replacement: An amount that replaces your income for a certain number of years 

• Outstanding debts: An amount that pays your mortgage, auto loans, student loans, credit cards, or other debts 

• Dependents: An amount that would allow your dependents to maintain their current lifestyle and have financial stability 

• Education costs: An amount to cover future college tuition and other education-related expenses 

• Final expenses: An amount to cover funeral, burial, or other final expenses 

It's helpful to think through your choices carefully and consider how they could serve your family. 

Life Insurance Calculator

• Salary and assets: Your current and potential future salary, along with other financial assets

• Dependents: Your spouse, children or others who depend on you financially 

• Expenses and debt: Your living expenses and amounts you owe on your mortgage, loans, and other debts 

• Health insurance: Gaps in coverage that health insurance doesn’t cover 

• State law requirements: Regulations regarding the availability of different policy types

• Long-term financial goals: Income replacement, debt reduction and retirement income 

As you think about your needs and expenses, it may become clear whether you need more life insurance than your job may provide. 

How does employer life insurance work? 

Enrollment in company life insurance often happens automatically when you become eligible for benefits, though some employers require you to actively enroll during a benefits period and may impose a waiting period before coverage begins. Employers may provide coverage at no cost to employees, while offering voluntary employee life insurance coverage that employees can purchase for an additional premium through payroll deductions. 

Under a group life insurance plan, the employer owns the master policy and serves as the policyholder, and eligible employees are covered as insured individuals. Each covered employee receives a certificate outlining their benefits and must designate a beneficiary, or the person (or people) who would receive the death benefit if the employee passes away. Employers typically set the coverage limit, but employees may have the option to elect higher coverage amounts, up to plan maximums, if they choose to pay for supplemental coverage. 

What is group term life insurance? 

Group term life insurance is a type of life insurance coverage that an employer may provide to its employees as part of a benefits package. Because the policy covers a large number of people under a single contract, employers are typically able to secure coverage at a lower cost than individuals could on their own. 

Individual life insurance vs group life insurance 

With an individual policy, you apply and are underwritten on your own, meaning your age, health history, and lifestyle factors can directly influence your premium and eligibility. Group term life insurance, on the other hand, can require little to no medical underwriting; employees are generally covered automatically or with minimal enrollment steps. 

Another important distinction is ownership and portability. An individual policy belongs to you regardless of where you work, so your coverage can follow you throughout your life as long as you continue paying premiums. Group coverage, however, is tied to your employment. If you leave the company, your coverage typically ends. Some group policies are portable, meaning you can take ownership of the policy when you depart and continue the coverage by paying the premiums yourself. 

How to supplement employer-provided life insurance 

While group term life insurance is a valuable employer benefit, it may not be enough coverage for some people. Employers typically offer coverage equal to one to two times your annual salary, which may fall short of what your family would need to maintain their standard of living, pay off debts, or cover long-term expenses like a mortgage or college tuition. 

Since company life insurance is tied to your job, if you change jobs, are laid off, or retire, you could lose your life insurance entirely. And that could be at a point in life when qualifying for a new policy becomes more difficult or expensive due to age or changes in health. 

Purchasing an individual policy to supplement your group coverage can be a smart financial decision. An individual policy can address several common gaps: 

• Insufficient coverage limits. If you need a higher level of protection than your employer's plan provides, an individual policy lets you choose a coverage amount that reflects your actual financial obligations and the needs of your dependents. 

• Job or career changes. An individual policy belongs to you regardless of where you work, so your coverage remains intact no matter how your employment situation changes. 

• Policy type flexibility. If a permanent life insurance policy better suits your long-term goals, such as building cash value or ensuring lifelong coverage, an individual policy gives you that option, whereas employer plans typically only offer term coverage. 

In addition to filling these gaps, an individual policy gives you the freedom to customize your coverage by adding riders that expand or enhance your protection based on your specific circumstances. 

Explore Life Insurance

The following steps can help guide you through how to get your own life insurance policy. 

• Choose a death benefit that meets your family’s needs. You may also want to add an accelerated death benefit rider. This rider can allow you to draw funds from the death benefit to help pay for medical services if you become seriously ill. 

• Pay special attention to the exclusions. Life policies exclude various situations, such as acts of war or terrorism, dangerous activities, fraud, and hazardous jobs. 

• Read the portability clause in your group life insurance policy. It will tell you whether you can take over the policy if you leave the company. 

How Does Whole Life Insurance Work?

Term insurance usually lasts 20 or 30 years, and the policy ends. Whole life insurance is permanent insurance that lasts your entire life. It includes a cash value account that accumulates growth. You can withdraw funds or borrow against the cash value, though doing so may reduce the death benefit.* Regardless of the policy you choose, inquire about underwriting requirements. You may have to answer personal and health questions or take a medical exam. 

Most importantly, choose a reliable, financially strong insurance company with a good reputation. 

Employee group life insurance vs. individual life insurance 

The chart below shows the differences between employee group life insurance and individual life insurance: 

Compare Life Insurance Solutions

When employer-provided life insurance may not be enough 

Life insurance planning isn't one-size-fits-all, and for some people, employer-provided coverage alone isn't enough to help protect what matters most. Additional protection can make a difference in several cases: 

• Job changes and career transitions. If you're between jobs, starting a business, or moving into contract work, an individual policy keeps your coverage intact no matter where your career takes you. 

• Terminal or serious illness. Some individual policies include living benefits, such as accelerated death benefit riders, that may allow you to access a portion of your death benefit if you're diagnosed with a terminal or chronic illness for qualified long-term care services. This can help provide critical financial relief when medical bills, in-home care, and limited assistance programs fall short. However, there is a maximum amount payable for this benefit. It may affect eligibility for public assistance programs and the remaining amount of the death benefit, and benefits may be taxable. 

• Dependents who rely on your income. If a spouse, child, or aging parent depends on your income to cover daily expenses, a mortgage, or education costs, the coverage an employer plan may offer may leave them financially exposed. An individual policy helps ensure they're protected. 

• Long-term and retirement needs. A permanent life insurance policy can help provide lifelong protection and, in some cases, act as a supplemental income source during retirement - something a group term policy isn't designed to do. 

By choosing the right policies in the right amounts, you can help build some financial stability that can hold up through life's changes. United of Omaha Life Insurance Company, a Mutual of Omaha company, offers policies you can choose from. 

Explore Life Insurance

Frequently asked questions (FAQs) 

1. Is employer-provided life insurance enough for most people? 

No. While it’s a nice benefit to have and there’s little or no cost, an individual life insurance policy can offer the higher coverage limits you need. More importantly, you never know when you’ll need to change jobs, and you always keep your own policy. 

2. Is group life insurance taxable? 

The first $50,000 your employer provides is not taxable income to the employee. If the employer provides coverage over $50,000, the cost of the additional coverage is taxable to the employee. 

3. Can I have a group life policy, an individual term policy, and a permanent life insurance policy? 

Yes. For example, you may receive free group life coverage from your employer. You may want a 30-year term life policy to cover a 30-year term mortgage. A permanent policy will last your entire life, even when the group and term life policies end. 

Sources

(1) Bureau of Labor Statistics, Employee Benefits in the United States, March 2025. 

(2) LIMRA, 2025 Facts About Life Insurance - Workplace Benefits, 2025.