Should You Buy Life Insurance Through Work?

It will probably be cheaper and easier.

Key Points Life insurance can give you peace of mind that your loved ones will be taken care of while you’re away, and you may even be able to take out a group policy through your employer. Group life insurance is likely to be inexpensive or even free. The scope of your policy will be reduced and if you change jobs you will lose your coverage.

Getting life insurance is one of the most beautiful things you can do for your loved ones. If you have people (or even beloved pets) in your life who depend on your salary or care, life insurance can ensure they make ends meet when you die.

Thankfully, life insurance isn’t hard to come by. The best life insurers offer many policy options, and you have a choice of life insurance types. You may even be able to get a policy through your employer as part of a range of benefits on offer, such as health insurance and a 401(k) plan. Does it make sense to take out group life insurance?

Reasons for life insurance through work

If your employer offers life insurance as a benefit, it is group life insurance. The company buys the policy on behalf of the employees and you will each receive a certificate of insurance. The nature of these policies makes them one-size-fits-all, and they are generally either free or very inexpensive for employees.

The policy itself is taken out for a set dollar amount or covers a multiple of your salary, and you simply choose your beneficiaries (those who will receive the money in the event of your death). Unlike private life insurance, you do not need to fill out a medical questionnaire or undergo a medical exam to qualify. If you have health conditions that make it costly or difficult to get private life insurance, group life insurance can make it possible for you to get coverage. And you might even have the option to pay a little more and take out voluntary life insurance. This would provide even more coverage. Group life insurance through work is cheap and convenient. But it has some disadvantages.

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Reasons not to buy life insurance through work

If your employer offers life insurance through one of these policies, it probably makes sense to get it, especially if it’s free to you. However, you may want to explore additional coverage options instead of relying on it to meet all of your life insurance needs.

Group life insurance is usually term life insurance, meaning it only covers you for a certain period of time before it expires. Nor does it build monetary value. If you prefer life insurance (much more expensive and cash building, so you may be able to take out a loan), you’ll have to take care of it yourself.

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Even the offered life insurance cannot make a lot of money. It is common practice to take out life insurance that replaces 10 times your salary and your employer is unlikely to offer that much coverage, especially at no or very little cost to you.

If your life insurance is tied to your employer, it ends when you leave that employer. Gone are the days when each of us could expect to spend all of our working years at the same company. Even if you get life insurance through your job, it makes sense to get an extra policy yourself to make sure you always have coverage. If you quit your job or get fired, you’ll have enough to worry about without adding another life insurance cover right away. And you could lose your job at any time without warning.

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All in all, it can be a good idea to get group life insurance through your employer. But to make sure you have enough coverage and that it lasts as long as you need it, you can supplement it with a policy from a private insurer.

Our picks for the best life insurance companies

Life insurance is essential when people depend on you. We combed through the options and came up with a best-in-class life insurance coverage list. This guide will help you find the best life insurance companies and the right type of policy for your needs. Read our free review today.