Should I Purchase Additional Term Coverage Outside of My Employer’s Group Plan?

If your employer is covering the cost of your life insurance, there’s no reason not to take advantage of it. However, if you’re paying for coverage yourself, it’s worth comparing the cost of an individual term policy to what’s offered through your workplace. Employer plans are often easy to enroll in but may not be the most cost-effective option long-term.

The Ramsey team recommends keeping no more than 50% of your coverage through your employer because most group plans aren’t portable. If you change jobs, you’ll either lose your coverage or have to go through medical underwriting at a time when you may need it most. Some plans allow you to convert your policy when you leave, but this usually means switching to a cash-value plan—an option Dave and his team strongly advise against unless you can’t qualify for term life insurance on your own.

Another important consideration is how group life insurance changes as you age. Many plans reduce coverage once you reach 60 or older, and while employer-sponsored rates may seem lower at first, they’re often only locked in for short periods, typically two years. In contrast, individual term policies offer fixed rates for 15 or 20 years, providing more stability and predictability.

If you’re unsure whether your employer’s plan is enough, compare term life rates for free online or call us at 800-356-4282 to speak with a Zander agent.