I have a group life insurance policy. Do I need supplemental insurance?


A group life insurance plan may not fit the needs of an individual employee.

If you work for a large company, you may have a life insurance policy as a part of your benefits package. Employees are usually offered group life insurance that covers two to three times their salaries at little to no cost. If you are covered under a group life insurance policy, you may wonder why it would be necessary to purchase an individual one. The truth is, your group policy may meet some of your needs, but most likely not all of them. 

How group policies work

Unlike individual life insurance policies that require policyholders to undergo a medical evaluation, employer-sponsored group policies offer coverage to all employees for the same rate — even those who would not qualify for individual coverage. Group life insurance rates are based on both the volume and risk profile of the entire organization.This one-size-fits-all plan does not take into account the individual needs of employees, like whether or not they have dependents.

While the death benefit amount that comes with a group policy may be sufficient for some employees, it is definitely not the best fit for everyone. Most employees also do not have the option of adding additional coverage to their plans without paying significantly higher premiums.

Continuity of coverage

If you leave a company or are laid off, it is unlikely that you will be able to transfer your policy. You may have the option of converting your group life insurance policy into an individual policy, but you will be responsible for paying the full premiums. 

If you have free or inexpensive life insurance available through your employer, there is no reason why you shouldn’t have it. Keep in mind, however, that group life insurance should be supplemental to an individual policy, not vice-versa. For an individual life insurance quote, please browse our website and see which policy fits your and your family’s needs.

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