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Is buying extra life insurance at work worth it?

I am asked many times about life insurance with Group Employee Benefit plans versus individual life insurance and whether people need one or the other, or both.

In many cases life insurance that is provided by the employer is for basic coverage and is not sufficient to cover the amount that is required for short term and long term needs. The employer however generally pays for the premiums and it is usually a requirement that everyone in the group has coverage.

The short answer is that a combination of both would be ideal, the basic group life insurance coverage for short term needs and individual coverage to top off your short term obligations in addition to your long term needs. A needs analysis calculator can help to determine how much coverage is required for individual insurance.

Below you will find some of the advantages and Disadvantages of Group Life Insurance coverage.

Benefits of Life Insurance under a Group Employee Benefit Plan

  • Lower premiums on the basic life insurance coverage, they are generally lower than individual life.
  • Employers typically pay for most if not all the premiums for a group benefit plan.
  • Conversion options are available within 30 days after employee termination from the group benefit plan

Disadvantages of Life Insurance under a Group Employee Benefit Plan

  • When applying for additional coverage in addition to what you are covered for under the group, you will in many cases pay higher premiums than individual coverage.
  • When you leave employment you cannot keep the life insurance, it will have to be converted, because of your age at the time, premiums would be much higher than if you took out individual coverage earlier.
  • Conversion options are limited. If you are in poor health you may not be able to shop the market for the best product or premium on the market.

It is always best to consult with a life insurance advisor but you can do the math to see what makes most sense for you. Complete the life insurance needs and analysis and you can get online life insurance quotes to compare for yourself.