Side-by-side comparison
Almost every working adult has some employer life insurance. Almost none of them ask whether it is actually enough. The honest answer is rarely.
The quick answer
Term Life Insurance
Yours. Portable.
You pick the coverage level, you keep it when you change jobs. Sized to the real gap your family would face.
Employer Life Insurance
Free baseline. Job-tied.
Usually 1 to 2x salary, gone the day you leave. Take it, but plan around its limits.
Employer life insurance typically covers 1 to 2 times your annual salary and ends the day you leave the job. Outside term life insurance covers a specific level for a set number of years and follows you wherever you work. Most working families need both: employer coverage as a baseline, term coverage to fill the real gap.
Walking into the first conversation, most families know they have life insurance because the open-enrollment form said so. They picked the 1x or 2x salary option, signed the box, and never thought about it again. The question that never gets asked is whether that coverage actually does the job if something happens to you tomorrow.
Here is the part that surprises people: employer life insurance is built around the employer's cost-benefit math, not around what your family actually needs. The default of 1 to 2 times salary works fine for a single twenty-something. For a Hudson Valley family with a mortgage, kids, and a single primary earner, it almost never covers the actual income replacement window.
By the numbers
Employer's 2x salary default covers about two years. Most families need 10 to 15 years of income replacement during the dependent years.
Illustrative example. Actual figures depend on individual circumstances (age, health, tax bracket, state, carrier) and may differ.
Side by side
| # | Attribute | Term Life | Employer Life |
|---|---|---|---|
| Typical coverage amount | $250k to $2M+ (your choice) | 1x to 2x your annual salary | |
| What happens if you leave the job | Coverage continues unchanged | Coverage ends, usually that day | |
| Cost (age 35, healthy) | ~$25 to $40/month for $500k 20-year term | Often free or pre-tax payroll deduction | |
| Underwriting | Medical exam, individual rating | Group rate, often no medical questions | |
| Portability | Yours, regardless of employer | Tied to your job | |
| Conversion option | Most policies include one | Sometimes, but at much higher rates | |
| Best fit | Income replacement during the kid years | Free baseline coverage you should not turn down |
Noah, our story-world guide
"Take the free employer coverage. Always. Then run the actual math and add an outside term policy that fills the real gap."
Decision rule
Decision rule
The expert take
Peter Guggisberg
Financial Advisor · Hudson Valley, NY
Take the free employer coverage. Then run the actual income-replacement math for your family and add an outside term policy that fills the gap. For a Hudson Valley family with a mortgage and kids, the gap between 2x salary and what your family actually needs is usually six figures or more. Outside term costs $25 to $40 a month at typical ages. The trade is worth almost every time.
Common questions
Your numbers, your call
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