Why the Life Insurance You Have Through Work Likely Isn’t Enough

Many people rely on the life insurance offered through their employer as their only coverage. While group life insurance is a valuable employee benefit, it often provides far less protection than most families need. If your loved ones depend on your income, it’s important to understand the limitations of work-based policies and why exploring individual life insurance could be a great solution.

Employer-Sponsored Coverage Amounts Are Typically Too Low

Employer-provided life insurance typically covers anywhere from $25,000 to 2x your annual salary. For a family with a mortgage, childcare costs, college tuition, and everyday expenses, that amount may not last more than a year or two. Financial experts often recommend coverage equal to 8 to 10 times your annual income—far more than most group policies provide.

You Can Lose It When You Change Jobs

Group life insurance is tied to your employer. If you change jobs, are laid off, or retire, you may lose your coverage altogether. While some plans are “portable,” meaning you have the right to continue the coverage on your own, it’s usually at a significantly higher cost and often with reduced benefits. Having your own individual life insurance policy ensures continuous protection, no matter where your career takes you.

Limited Flexibility and Options

Work-based life insurance is designed to be simple, not customized. Employer policies typically limit your options for policy design and your ability to add specialized features like riders. With individual coverage, you can choose the amount, type (term, universal, whole), and features that fit your family’s goals.

Rates May Rise Over Time

Employer plans often adjust premiums as you age. That means your costs could increase significantly in later years. By contrast, an individually purchased term life policy can lock in your premium for 10, 20, or 30 years—providing predictable, long-term affordability.

Summary

While life insurance through work is a helpful benefit, it’s rarely enough to safeguard your family’s future. An individual life insurance policy ensures you have the right amount of protection, tailored to your goals, and guaranteed regardless of your employment status.

At Farr Johnen & Associates, we help individuals and families evaluate their existing coverage and design supplemental life insurance strategies that provide true peace of mind. Learn more about protecting your family at fjinsure.com.