Educational Article

Where Should I Get Life Insurance?

There are two common life insurance options: Employer-provided or self-purchased through an insurance company.

Employer-Provided vs. Personally-Purchased

Should you get your life insurance through your employer? On your own? Both?

The best answer depends on your specific situation, but here’s a quick comparison of these two widely used approaches to purchasing life insurance.

Employer-Provided	Personally-Purchased
Pros: Often does not require medical testing Lower cost than comparable individual policy Paid for directly from paycheck (sometimes with pretax dollars)	Pros: Can stay in force for a lifetime Not dependent on employment status Higher potential cost stability over time
Cons: Often ends with employment If convertible to individual policy, can often be too expensive to maintain	Cons: Often requires medical testing Can be expensive depending on the type and amount

Employer-Provided

Personally-Purchased

Pros:

Often does not require medical testing
Lower cost than comparable individual policy
Paid for directly from paycheck (sometimes with pretax dollars)

Pros:

Can stay in force for a lifetime
Not dependent on employment status
Higher potential cost stability over time

Cons:

Often ends with employment
If convertible to individual policy, can often be too expensive to maintain

Cons:

Often requires medical testing
Can be expensive depending on the type and amount

One Size Does Not Fit All

This doesn’t have to be an either/or scenario — there really is no one right answer.

The most conservative approach would be to avoid relying on employer-provided coverage since it could end unexpectedly, leaving you with no coverage and a need to buy individual coverage at a potentially very high price at a very inconvenient time.

On the otherhand, covering your life insurance needs on your own could be too expensive given how much individual coverage costs in comparison to employer-provided coverage.

Tip: A hybrid approach of having employer-provided and personally-purchased life insurance can be a good solution. Individual coverage can be purchased for the amount of protection deemed absolutely necessary, and employer-provided coverage can be used used for the rest.