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4 advantages of employer-subsidized life insurance

Employer-sponsored life insurance

Many employers offer benefits to entice employees to work for them and stick around for the long haul. An employer-subsidized life insurance plan is a popular benefit option that ensures each employee has life insurance coverage. If you’re unsure about enrolling in your employer-subsidized life insurance plan, here’s how it works and four reasons to take advantage of it.

What is employer-subsidized life insurance?

Also known as group term life insurance, employer-subsidized life insurance is offered through an employer who takes care of the premium payments on your behalf. These policies tend to offer small death benefit payouts, often in the ballpark of $50,000 USD or one year’s salary. But many employers give employees the option to add additional coverage for an extra premium.

Why should you enroll in group term life insurance?

Perhaps you are onboarding with an employer who offers subsidized life insurance or you have this benefit but haven’t used it yet. In either case, here are four reasons to take advantage of your employer-subsidized life insurance plan:

1. Many policies are free

Very few things in life are actually free anymore. But many employer-subsidized life insurance plans are free for employees as a perk of employment. That means you’ll be enrolled in the policy for a death benefit amount decided by the employer without anything extra coming out of your paycheck each month.

2. Coverage is often a guarantee

Many group plans through employers are guaranteed. That means there is no review process, and those with medical conditions can still qualify.

Also, employers may subsidize coverage up to a certain point. But these employer-subsidized plans may also give you the option to purchase additional coverage up to a certain limit without medical review.

3. Getting the policy in place is easy

People often recognize the need for life insurance. But, sometimes they just don’t want to do the extra work of finding and applying for the right policy. An employer-subsidized plan takes the guesswork out of getting life insurance. Your only responsibility is to opt into coverage and assign appropriate beneficiaries.

After taking advantage of your employer policy, you may feel more comfortable seeking out your own policy. Since group life insurance is often limited in terms of the death benefit payout, pairing it with an individual policy like permanent or term life insurance can create an extra layer of coverage for your beneficiaries.

4. Possibility to convert to permanent life policy if you leave your job

An employer-subsidized life insurance option is contingent on employment. That means you forfeit the benefit if you leave your job. But some insurers may present you the option to continue coverage when you terminate employment. However, keep in mind that the terms could change if you convert to a permanent policy, and you may have to pay a higher premium.

A few final words on employer-subsidized life insurance

There’s very little reason not to take advantage of your employer-subsidized life insurance plan. But it’s important to keep in mind that the plan may not be sufficient for your life insurance coverage needs.

That’s why it may be optimal to pair your employer’s plan with an independent life insurance policy of your own. That way, you’ll have the coverage you need at a price you can afford.

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