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Know If Life Insurance Through Your Employer is Sufficient

Published On Jun 25, 2021 4:15 PM By InsuranceDekho

Companies provide life insurance policies to their employers to provide financial security to their families in the face of an unfortunate event. But it is often not sufficient to protect your loved ones alone. You must have a personalized life insurance policy to meet your and your distinct family needs. Read on to find more reasons why the life insurance policy provided by your employer is not enough.

Is Life Insurance Through Your Employer Sufficient?

Here are some reasons to convince you that the life insurance policy provided by your employer is not sufficient.

1. Insufficient Life Cover

The fundamental purpose of a life insurance policy is to meet the individual requirements of the life assured and his/her family. However, life cover provided by the employer's plan is determined according to the income and position of the employee. It thus does not offer insurance according to the family's needs. Instead, they provide similar benefits to everyone, which might not be sufficient for your family. Moreover, even the additional rider benefits can not be purchased by an individual to customize their plan. 

2. Limited Duration of the Policy

The life insurance policy provided by the employer offers life cover for 10-15 years, i.e., which expire after the duration. But, on the other hand, the employee may not even enjoy the life coverage if he/she retires before completing the policy duration. This leaves the person in his 50-60s with no way to ensure the financial security of his/her family if something unfortunate happens. Moreover, purchasing a life insurance policy during this time will lead to low coverage at higher prices due to the individual's higher vulnerability towards diseases and illness. Thus, it is advisable not only to rely upon the employer's plan. 

3. Discontinuation of the Plan By the Employer

The employer may terminate the policy if the facility does not generate profits or if the company lacks the funds to renew the policy for another year. In this case, the employee who was solely dependent on the employer’s plan will lose the policy, leaving him/her financially vulnerable. 

4. Leaving the Job

The life insurance policy gets terminated once the employee quits his/her job. In addition, some policies do not allow the transition of a group plan to an individual plan as the terms and conditions are determined between the employer and the insurance providing company. 

5. Decline in Health 

The situation gets troublesome if the employee has to leave his/her job due to a medical condition and depends on the employer’s insurance plan for benefits. Ironically, the employee will not get any coverage when he/she needs it the most. 


Despite providing a  life cover without much documentation and hassle, the points discussed above point out that a life insurance policy provided by the employer is not enough. Hence, it is essential to have a customized life insurance policy to meet your distinct needs and your family’s future goals and requirements. You can even consult a financial advisor or an insurance agent to help evaluate the sum assured, necessary policy duration and premium rates before purchasing the right plan.

Also read - Importance of Life Insurance For Married Couples

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