Does Employer Insurance End at Retirement?

If you’re fortunate enough to find a job with great benefits, your workplace might provide you with a group term life insurance policy, offering you coverage at a low cost in case the unthinkable happens. However, employer-provided life insurance has some serious limitations, especially as you consider preparing for retirement. Don’t fear, though: you have options to make sure you have the best life insurance to meet your needs.

What happens to life insurance when you retire?

Group term life insurance, which is life insurance provided by your employer, depends on your employment. Your employer-provided insurance may lapse shortly after your last day on the job, leaving you without life insurance coverage.


Your employer may also offer you an opportunity to extend your life insurance policy into your retirement by paying monthly premiums. While you might be tempted to take this option, group term life insurance becomes more expensive when you retire. A policy that has cost almost nothing for years can become a huge expense overnight.

Consider Supplemental Life Insurance

To ensure your family’s needs will be met even after you’ve entered retirement, it’s usually best to buy an individual plan that’s not tied to your employment to supplement your life insurance. You can purchase supplemental insurance from your group term life insurance provider, but term and permanent life insurance policies from the open market usually offer better value.

Term life insurance

If you’re looking for a budget-friendly option, term life insurance could be the perfect fit. This type of policy covers you for a fixed number of years that you decide on upon enrollment. Depending on your needs, you can choose coverage that lasts as little as a year or as long as 30 years.


Most term life insurance plans are relatively inexpensive and offer substantial coverage. Term life insurance could work for you if you’re concerned about a specific expense, like college tuition for your children or a mortgage.


However, if you outlive the policy’s term, your beneficiaries won’t receive a death benefit when you pass away. Term life policies also don’t have cash value, so you can’t withdraw from them to help fund your retirement. Another life insurance option could better prepare you for retirement and offer you more peace of mind.


Permanent Life Insurance

Permanent life insurance policies provide you with coverage through the end of your life. They also accrue cash value over time. Permanent life insurance is a particularly appropriate option if you plan on retiring at a young age because it offers much more long-term security than term life insurance.


The most common type of permanent life insurance plan is whole life, with fixed premiums, fixed changes in value, and guaranteed death benefit amounts. However, universal life insurance offers permanent coverage with more malleable payment options.


One notable drawback to permanent life insurance, especially whole life, is its relatively high cost. Annual costs are usually in the thousands versus only a couple hundred dollars for term life. The good news is that you can lock in a lower cost if you enroll in a whole life insurance plan while you’re young, especially if you’re in good health.

Start Preparing for the Future

Overall, there’s no time like the present to start thinking about life insurance and retirement. Your employer-provided plan may work for you for now, but to set yourself up for success, you should consider investing in additional protection. It’s a good time to review your enrollment documents and consider your financial needs to make the best life insurance decision for your future Read More

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