Life insurance financially protects your family in the event that something covered by the policy happens to you. There are numerous types of life insurance plans available, but if your employer offers one, you might be wondering whether or not you should sign up for it.

In this guide, we’ll explore your options and provide details to help you decide if employer-sponsored life insurance is the right choice for you

How does employer life insurance work?

Employers that want to offer life insurance to their employees do so by purchasing an employer-sponsored life insurance plan. Doing so gives you the option of signing up for a life insurance policy through your place of work. Coverage amounts are usually based on a multiple of your salary. For example, if you earn $60,000 annually, you might qualify for a policy with benefits totaling two times that figure, or $120,000.

Once you sign up for voluntary life insurance through your employer, the policy will function largely the same way it would if you signed up independently for term life insurance. This means you’ll have life insurance coverage for a predetermined number of years without accruing a cash value component.

Most often, employers only offer term life policies, not permanent life insurance. If you want permanent coverage, you will need to purchase a plan independent of the one offered by your employer. However, you may be able to buy a smaller permanent life insurance policy with lower premiums and supplement it with an employer-sponsored term life insurance policy.

Read our guide covering life insurance for beginners to better understand the different types of life insurance available to you.

Why do employers offer life insurance?

Many employers offer life insurance as a benefit to their employees by covering at least a large portion of their premium payments. This provides you with life insurance coverage at little or no cost typically for the duration of your time working for that employer. Companies offer benefits like this because they receive value through doing so. For example, offering the right benefits can help a business attract talented workers, minimize employee turnover and boost productivity.


Should you get life insurance through work?

Employer-paid life insurance may or may not be the best life insurance for your needs. To decide whether you should get a life insurance policy through work, evaluate the benefits and drawbacks of signing up for optional life insurance through an employer. The following section details some of the pros and cons of participating in an employer-sponsored life insurance plan.

The benefits of employer life insurance

Convenience and ease of enrollment

Life insurance policies offered by your employer can make enrollment easier. You don’t have to worry about finding the ideal provider or going through the potentially lengthy process of receiving an individual quote. In many cases, these are no-exam life insurance plans.

Instead, you inform your employer of your desire to enroll in its life insurance coverage — which typically occurs during open enrollment or new employee onboarding — and answer a few questions to activate your policy. Of course, specific enrollment procedures can vary by company.

Potential group discounts and lower life insurance premiums

The main advantage of signing up for an employer-sponsored life insurance plan is receiving the discounts you may get by doing so. Your company will likely help you pay your life insurance premiums or, in many cases, cover them entirely up to a certain amount of coverage. This leads to you getting life insurance coverage at a lower out-of-pocket cost.

No medical underwriting required

To elaborate on the point made earlier, another advantage of employer life insurance plans is that you often don’t need to complete a medical exam to qualify. This saves you time and may allow you to qualify for coverage you might not have on your own if you had to complete a medical exam, especially for those who would require a high risk insurance policy