Is employer-provided life insurance enough?

Almost never for people with dependents. Employer coverage of 1–3× salary (e.g., $70,000–$210,000 on a $70,000 salary) is a fraction of what most families need. The DIME method typically produces needs of $700,000–$2,000,000+ for families with mortgages and young children. Treat employer coverage as supplemental, not primary.

Should I buy supplemental life insurance through my employer?

Possibly — many employers offer optional supplemental life insurance at group rates, often up to 5–10× salary. Group supplemental may be cheaper than individual term for older workers or those with health issues who might pay higher individual rates. However: it’s still not portable. The safest strategy is private term as your primary coverage with employer coverage (basic + supplemental) as additional protection.

Can I keep employer group life if I leave my job?

Most group term life cannot be continued after employment ends. Some policies offer conversion rights — you can convert to an individual permanent policy within 30 days of leaving, without a medical exam. However, converted policies are expensive whole life products, not term insurance. The conversion option protects insurability but at a very high premium. Plan for the loss of group coverage when changing jobs.

What is group life insurance assignment?

Some employer group life insurance allows 'assignment' — the employee can assign their policy to someone else (typically an irrevocable life insurance trust) for estate planning purposes. This removes the death benefit from the taxable estate. Most employees don’t need this, but high-net-worth employees at companies with generous group life benefits may benefit from this estate planning strategy.

Is employer group life insurance taxable?

The first $50,000 of employer-provided group life insurance is excluded from the employee’s taxable income. Coverage above $50,000 is taxable as imputed income using IRS Table I rates. On a $140,000 group policy for a 40-year-old: the cost of the $90,000 excess coverage is added to W-2 income (typically $50–$80/year at this age). This is a small tax cost for a valuable benefit.

Group Life Insurance vs. Private Term: Why Employer Coverage Alone Isn’t Enough

Most employers offer some life insurance as a benefit — typically 1–2× your annual salary. At first glance, this sounds valuable. But it’s not portable, it’s usually dramatically insufficient, and it creates a false sense of security that prevents people from buying adequate private coverage. Here’s the complete comparison of employer group life vs. private term insurance.

Group Life Insurance vs. Individual Term: Direct Comparison

Employer group life insurance vs. individual term life comparison

Feature	Employer Group Life	Individual Term Life
Typical amount	1–3× annual salary	Any amount you qualify for
Cost to employee	Often free or very low	Full premium (typically $25–$100/mo)
Portability	No — lost when you change jobs	Yours regardless of employment
Coverage adequacy	Typically insufficient	Can be sized to actual need
Underwriting	Usually minimal (guaranteed issue)	Full medical underwriting
Cost-efficiency	Good (employer subsidizes)	Good for high coverage amounts
Control	Employer controls terms	You control the policy

The Portability Problem

The most significant flaw in employer group life: it’s not portable. If you lose your job, change employers, or your employer goes bankrupt, coverage disappears. COBRA continuation of group life insurance is rarely available or practical. If you’ve developed a health condition since joining the company, losing group coverage means potentially being uninsurable for adequate private coverage. This gap risk is the main reason to always carry private coverage alongside employer coverage.

⚠️The Layoff Risk Scenario

You have 2× salary group life ($140,000 on $70,000 salary) and no private coverage. You’re laid off at age 52 after a cancer diagnosis. You’re now uninsurable for individual life insurance and your group coverage is gone. Your family has no protection and you can’t get coverage at any price. This is the scenario that makes private, individual term insurance non-negotiable for anyone with dependents.

How to Supplement Employer Coverage

Most people’s strategy: (1) Accept employer group life as 'free' supplemental coverage; (2) Calculate actual coverage need using DIME; (3) Subtract group coverage from total need; (4) Purchase private term insurance for the remaining gap. Example: DIME = $1,500,000 need; employer provides $140,000; private term needed: $1,360,000.

Calculate the Gap Between Your Group Coverage and Your Need

Enter your DIME need and employer coverage to find how much private insurance to buy.

Open Life Insurance Calculator →

Group Life Insurance vs. Private Term: Why Employer Coverage Alone Isn’t Enough

Group Life Insurance vs. Individual Term: Direct Comparison

The Portability Problem

How to Supplement Employer Coverage

Frequently Asked Questions

Frequently Asked Questions

More Life Insurance Guides

How to Use the Life Insurance Calculator: Complete Guide

Life Insurance for a Young Family: Step-by-Step Coverage Plan

Term vs. Whole Life Insurance: Which Is Right for You?