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Insights and tips on securing financial stability for you, your family, and your business.

Employer vs. Individual Life Insurance

The difference between employer and individual life insurance


Supplemental life insurance coverage falls into two categories: employer-offered and individual insurance. Some employers may allow you to purchase coverage above and beyond what they provide — often in $10,000 increments up to a stated maximum. But is it the right decision to purchase more life insurance coverage through your employer or purchase an individual policy on your own?

Here are some important things to consider as you start to explore what type of supplemental life insurance meets your needs:

• Does the cost of any current insurance change as you get older?

• Can you take the coverage you have with your employer with you if you leave or lose your job?• What type of life insurance does your employer offer?

• How long does your employer’s coverage last?

• Do you have a medical condition that may impact your individual insurance rate?

This guide will go over the difference between employer and individual life insurance and its advantages and disadvantages.

Employer-offered Life Insurance

Includes features of both employer-paid and voluntary-purchased coverage


• No medical questions or requirements for certain amounts of coverage for employees, spouses and children (can’t be declined in certain situations)

• Generally, costs less initially for people near or under age 35, tobacco users or people with health issues

• May have Accidental Death & Dismemberment (AD&D) Rider that could double benefit amount if insured dies accidentally

• Can get small amounts of coverage

• Often payroll deductible while working for employer


• May lose coverage upon termination of employment (unless there’s a portability option)

• Generally, cost will increase as you get older

• Cost can increase upon termination of employment

• Maximum coverage amount may be less than you need

• Limits amount of coverage you can get for spouse or children

• Coverage usually ends at a certain age (typically 70 to 75)

Individual Life Insurance

Includes features of both term and permanent coverage


• Generally, lower cost over life of policy, especially if in good health

• Leaving your employer doesn’t affect your coverage

• Can lock in your premium for a period of 10 years up to a lifetime

• Can convert individual term insurance to permanent coverage

• Higher coverage amounts are available when needed

• Has more rider options


• May need to go through medical underwriting

• Could be declined coverage

• AD&D Rider often isn’t available

• Minimum amount of coverage may be more than you need

• Generally, higher initial cost for younger people

• No payroll deduction available