A guide to employer-sponsored term life insurance: 7 key considerations
While we always encourage individuals to secure their own life insurance, the reality is that around 65% of Americans rely on employer-provided coverage to meet their needs.
That’s because employer-sponsored coverage tends to be convenient and affordable for workers, making it essential for employers to offer options that truly protect their employees’ families.
One of the most common types of employer-provided coverage is term life insurance, offering employees essential protection for a set period of time, such as 10, 20 or 30 years. Policy face amounts often range from $25,000 to $250,000, providing options that can help families replace lost income, cover living expenses, pay off debts, fund college, save for retirement and so much more.
Are you considering adding term life insurance to your benefits package? Here are seven key considerations to understand.
1. Term life insurance can help attract and retain talent.
A comprehensive benefits package that includes term life insurance can make your company more attractive to potential hires because it demonstrates that you care about the well-being of your employees and their families. In addition, employees are more likely to stay with a company that offers robust benefits, reducing turnover and hiring costs.
2. Financial security benefits the workplace.
One in three employees say financial issues impact their ability to focus at work, and nearly 25% say the stress reduces their productivity and confidence on the job. However, term life insurance helps provide employees with peace of mind knowing that their families will be financially protected if the unexpected happens.
Related: Why you should prioritize financial wellness in the workplace
3. Term life insurance is cost-effective for employers and employees.
Term life insurance tends to be the cheapest type of life insurance policy—and group policies are often even more affordable because employers can sometimes negotiate better rates. Employers may have the option to choose from several funding options, such as 100% employer paid, 100% employee paid, or a combination of both.
4. Flexible underwriting options can help more employees get coverage.
Flexible underwriting options, such as Guarantee Issue (GI), Select Simplified Issue (SSI), and Simplified Issue (SI), can make it easier for more employees to obtain coverage. These streamlined options reduce the complexity of the underwriting process, allowing a broader range of individuals to qualify for insurance in a group setting. By offering these options, insurers can attract a wider pool of employees, making coverage more accessible to those who might face challenges with traditional underwriting methods.
5. Some term life insurance polies offer additional protection.
Life insurance riders, such as Terminal Illness Accelerated Benefit, Waiver of Premium, and Accidental Death Benefit, can help provide additional protection for employees when they need it most. Riders are often available for extra premium costs, but some insurers do offer riders for no additional cost.
6. Employer-sponsored term life is ideal for underserved individuals.
Did you know that women, single parents, younger workers, and lower income earners are less likely to have life insurance? With affordable rates, more inclusive underwriting, and convenient access at work, employer-sponsored term life is a valuable option for workers who might not otherwise purchase coverage.
7. Communication is key.
Just 27% of adults with only workplace life insurance coverage say they’re very or extremely knowledgeable about life insurance. At the same time, workers who believe their employers communicate their benefits extremely well are more than twice as likely than those who believe their employers don’t communicate their benefits effectively to claim a higher understanding of their life insurance benefit (71% versus 34%). This highlights the importance of benefits communication in the workplace. Look for a carrier that not only offers a competitive term life insurance product but also provides expert assistance to help employees make informed decisions about their coverage.
Want more? Check out our blog, 4 ways to help support employees’ health literacy in 2025.
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