Home Life insurance Types of life insurance The limitations of group life insurance The limitations of group life insurance Written by: Desiree Ghazi | Reviewed by: Nupur Gambhir Nupur Gambhir Nupur Gambhir is a content editor and licensed life, health, and disability insurance expert. She has extensive experience bringing brands to life and has built award-nominated campaigns for travel and tech. Her insurance expertise has been featured in Bloomberg News, Forbes Advisor, CNET, Fortune, Slate, Real Simple, Lifehacker, The Financial Gym, and the end-of-life planning service. | Updated on July 18, 2023 Why you should trust Insure.com Quality Verified At Insure.com, we are committed to providing honest and reliable information so that you can make the best financial decisions for you and your family. All of our content is written and reviewed by industry professionals and insurance experts. We maintain strict editorial independence from insurance companies to maintain editorial integrity, so our recommendations are unbiased and are based on a comprehensive list of criteria. Group life insurance is a benefit usually offered by employers at very low cost. While coverage is inexpensive, in many cases it shouldn’t be your only life insurance. Instead, group life insurance should be used to supplement an individual life insurance policy. Read on to learn more about group life insurance’s limitations and why it may not offer the coverage you need. You can easily lose the coverage The major downside to group life insurance coverage is that you can lose it at any time. For example, if your employer decides to eliminate the benefit to trim costs, you will no longer have coverage. Additionally, if you lose your job or leave your job, you’ll also lose your coverage. The death benefit may provide less coverage than you need Most employer-sponsored coverage generally only provides a small death benefit amount — typically one to two times your annual salary. This amount works to supplement an individual plan, but it may not be enough to provide sole coverage, especially if you have young children. Life Happens, an industry group providing life insurance education, says one of the easiest ways to figure out how much coverage you need is to multiple your gross income by 10 to 15. You have fewer choices of riders You can customize a policy you buy on your own by choosing from a variety of additional features called life insurance riders. You can’t always customize the life insurance benefits your employer buys for you, and if you can, the options may be limited. QuickTake What is indexed universal life insurance? What happens if you outlive your term life insurance? What is final expense insurance and how does it work? 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How to buy group life insurance for your small business See more > You can’t borrow from a group life policy or cash it in Only permanent policies, such as whole life or universal life, feature a cash value component, which is an accompanying savings account that accumulates on a tax-deferred basis. You can borrow from the cash value and use the money for any purpose, whether it’s to pay college tuition or supplement your retirement. You can also surrender the policy for the surrender value. Typically the life insurance offered as an employee benefit is term life, which has no cash value. If you have unique financial needs and need a cash value life insurance policy, group coverage won’t suffice as your sole coverage. How to buy an individual life insurance plan Given the limited coverage you get from group life insurance, you will also need an individual policy to be sure your loved ones have a financial safety net after you’re gone. To get a policy, shop around and compare quotes from at least three insurers to find a company that offers you the best policy at the most affordable price. Check out the best life insurance companies to know where to start. × Get Free Life Insurance Quotes Today! Zip Code Please enter valid zip Age Age 16 – 20 21 – 24 25 – 34 35 – 44 45 – 54 55 – 64 65+ Coverage Amount Coverage Amount $50,000 – $100,000 $100,000 – $200,000 $200,000 – $300,000 $400,000 – $500,000 $500,000 – $1,000,000 $1,000,000 – $2,000,000 $2,000,000 – $5,000,000 $5,000,000+ Coverage Type Coverage Type Whole Life Term Life Final Expense Not Sure Gender Gender Male Female Non-Binary Tobacco Use Yes No Compare Quotes Related Articles What is demutualization and what does it mean for policyholders? By Laine Adley Life insurance riders: What they are and how they work By Laine Adley What is a life insurance beneficiary? By Laine Adley What happens if you outlive your term life insurance? 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