Should I Buy Supplemental Life Insurance From My Employer?


Costs for Typical Supplemental Group Life Plan vs. Individual Policy

(Male, born June 1985, Issue Age 33)

Group Certificate Insured Age

Not Portable Death Benefit

Premium Increases (Every 5th Year)

Not Guaranteed Annual Premium

Not Guaranteed Bi-Weekly Premium

Age 33


$    710.00

$  27.30

Age 35


in  2 yrs

$    800.00

$  30.76

Age 40


in  7 yrs

$ 1,000.00

$  38.46

Age 45


in 12 yrs

$ 1,500.00

$  57.69

Age 50


in 17 yrs

$ 2,210.00

$  85.00

Age 55


in 22 yrs

$ 3,900.00

$ 150.00

Age 60


in 27 yrs

$ 5,900.00

$ 226.92

Individual Contract Insured Age

Portable Death Benefit

Guaranteed Level Premium

Guaranteed Annual Premium

(Payable Monthly, Quarterly, Semi-Annual or Annual)

Age 33 thru 63


30 years

$    734.00




Top 10 Reasons You Should NEVER Buy Supplemental Group Life Insurance

  1. Higher Cost: Overpriced usually by 200%+ due to adverse selection pool. Open enrollment means little or no medical requirements to join, so healthy employees subsidize those with medical issues. Group life is essentially a high cost, high risk insurance pool - premiums are rated to account for this. People with just average health can always buy superior individual coverage for a fraction of the cost.
  2. Premiums Increase:  Group rates are not guaranteed and will increase substantially every 5 years.  Don't be fooled by teaser rates at a younger age.  Individual policies have guaranteed level premiums available from 10 to 30 years. 
  3. Not Portable:  Coverage stops and cannot be taken with you when employment ends.
  4. Tax Cost:  Free group coverage is a good deal, but can not be completely free. Coverage 100% paid by an employer (no employee cost) requires the insured to report additional taxable income under IRS Section 79 calculated on coverage amounts over $50,000. 
  5. Fuzzy Comparisons:  Group rates effectively mask the high costs (quoting charges over 26 time periods per year) and can be confusing.  Always compare premiums using the total annual premium for each current and future year.  Group premiums are almost never subsidized
  6. Cancel-able:  The insurance company, employer, and association can all cancel coverage at any time. The rates and coverage are typically guaranteed only 30 days. A group policy is a certificate, so you have no ownership or control.  An individual policy is a guaranteed contract you own, a major difference in your favor. 
  7. Disappearing Coverage:  Coverage decreases and terminates at older ages, and usually gone by age 70. 
  8. No Continuation:  If a group conversion exists (very unlikely) to continue with a permanent policy of some individual, it is highly over-priced.  So even if you are totally uninsurable, it may be of little or no value. 
  9. No Guarantees:  In addition to not guaranteeing any future coverage (see Cancel-able), the group life death benefits and rates can be changed or discontinued at any time.  The projected rates increase substantially—and faster— every 5 years.  There is no guarantee or limit on future cost increases.
SUMMARY:  Purchasing supplemental group life insurance through your employer is easy and convenient, but is only a good idea for employees who have severe health issues or not insurable.

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You will enjoy the professional, friendly service from our experienced staff.  Contact us for no-cost quotations and research (we work with every carrier) and learn more about the right insurance policy for you.

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