Updated September 2026 · 8 min read
Most people with employer life insurance believe they are covered, and most of them are covered for far less than they think. Group life is a genuine benefit, and it is almost never enough on its own.
Here is what it usually provides, what happens to it when you leave, and how to work out whether there is a gap.
The standard benefit is one to two times your annual salary, sometimes with an option to buy additional coverage at your own cost during an annual enrollment window.
For a household with a mortgage and young children, one times salary does not come close to replacing an income for the years it would need to. It is a helpful piece of the picture, not the picture.
This is the part that matters most. Group life belongs to the employer's plan, and it generally ends when your employment ends — including if you are laid off, resign, or reduce your hours below the eligibility threshold.
Some plans allow you to convert or port the coverage when you leave, usually within a short window and often at a much higher rate than you were paying as an employee. Portability is worth checking before you need it, not after.
There is also a harder scenario. If you leave a job and later become seriously ill, the coverage you had is gone, and new coverage may be unavailable or priced very differently. Owning a policy personally removes that risk.
Employer-paid group life coverage above a certain value — historically $50,000 of death benefit — creates imputed income that is reported on your W-2, and you pay tax on that amount even though you never receive it in cash.
It is not a large number, but it surprises people who notice an unfamiliar line on their pay stub in January. Now you know what it is.
Take the coverage amount you need — income replacement, mortgage, debts, education, final expenses — and subtract everything you already have: group life, any personal policy, savings your family could draw on, and any survivor benefits they would qualify for.
What is left is the gap. For a household earning $80,000 with a $300,000 mortgage and one times salary in group coverage, the gap is usually large. That gap is what an individual policy is for.
You do not have to choose between employer coverage and your own policy. Most people keep the group coverage — it is often free or very cheap — and buy an individual term policy to close the gap.
The individual policy is yours. It stays with you if you change jobs, it does not depend on an employer's annual decisions, and the price is locked for the length of the term.
Individual life insurance is priced on your age and health at the time you apply. Every year you wait, the premium for the same coverage is higher, and a new diagnosis can change what is available to you entirely.
If you have been meaning to look at this for a few years, the cost of that delay is now visible in the quotes. It is one of the few purchases where waiting is reliably more expensive.
Check whether your old group coverage has already ended, and whether a conversion or portability window is still open. Those windows are typically short — often 30 to 60 days — and they close quietly.
Then treat it as a fresh start: work out the gap, price an individual policy, and stop relying on a benefit that is tied to someone else's payroll.
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