Group life through work and what it leaves out
The short answer
Employer group cover is usually cheap or free, and there is rarely a reason to decline it. It is also rarely enough on its own, and the cover normally ends when the employment does — which is the point most households discover later than they should.1
How much cover group plans provide
Group life is commonly expressed as a multiple of salary — one or two times annual pay in many plans. Measured against a remaining mortgage and the years of childcare ahead, that multiple frequently leaves a gap. The gap is the reason a personal policy exists alongside it, not instead of it.
| Feature | Employer group | Personal policy |
|---|---|---|
| Cost | Often employer-paid or subsidised | Paid by the policyholder |
| Amount | Typically tied to salary | Chosen by the policyholder |
| Portability | Ends with employment | Follows the policyholder |
| Underwriting | Usually simplified or none | Health and age at application |
| Rate stability | Set by the employer's plan | Fixed at issue on level term |
| Beneficiary control | Set within plan rules | Set by the policyholder |
What happens when the job ends
Group cover normally stops with employment. Conversion rights, where they exist, tend to be priced above what the same cover would cost individually, which is why conversion is often described as available rather than advisable. Cover held personally does not have this problem.
Size the personal policy against the gap the employer plan leaves, not against the household's total need. That avoids paying twice for the same protection and keeps the personal premium lower.
Tax treatment
Employer-provided cover above a statutory threshold can produce a taxable benefit reported on a wage statement, while proceeds paid to a beneficiary are generally received free of federal income tax. Both points depend on current rules and on the individual's situation.
Where the rules differ
Conversion rights, portability terms and the tax threshold above sit in federal tax rules and in state insurance regulation, and the state rules differ. Confirm both before relying on employer cover as a long-term arrangement.
National Association of Insurance Commissioners (NAIC), consumer guidance on life insurance products, underwriting and policy terms. National Association of Insurance Commissioners — reviewed 31 October 2026.
2026 Insurance Barometer Study, LIMRA and Life Happens. National survey of 5,237 adult financial decision-makers aged 18–75, fielded January 2026.
No price figures are published on this page. The page describes how the product works and where the terms vary, so it stays accurate as market prices change.