Open Enrollment Season: What’s the Best Option for Life Insurance?

Share on facebook
Share on twitter
Share on linkedin
Share on email

group vs. individual life insurance couple enjoying financial security under umbrella

By Grant Lyon, CFP®

If your employer is sending you notices regarding open enrollment, you have just a small window of time to review your existing benefits package and identify any needed changes. An important topic to focus on when it comes to open enrollment is group life insurance.

Group Life Insurance: The Basics

Many employers generously offer life insurance to employees as a perk. Typically, there is a basic group life benefit which is often free and guaranteed for just about every employee. The coverage is relatively small, perhaps equal to your base salary. Opting for this basic group life coverage should be a no-brainer.

Some employers offer additional life insurance for a price, known as supplemental group life coverage. Supplemental coverage is typically a multiple of your salary (2x, 3x, etc.) and likely comes with a required medical exam. The rates offered through your employer can be very affordable versus the broader marketplace.

Understanding the Drawbacks

One of the arguments against supplemental group life insurance is that coverage may end if you leave your company. There is a chance that your policy is portable, meaning that you can take it with you when you leave. However,  because life insurance gets more expensive as you get older, the cost to sign up for additional outside coverage could be significantly higher than what you are paying while an employed member of the group.

Another issue with relying on supplemental group life insurance is that your next employer might not have the same benefits package. If this is the case, you run the risk of leaving your beneficiaries out in the cold should something tragic happen to you. Given such cases, we recommend that you at least consider adding an individual term life insurance policy. This type of life insurance is affordable (especially if you buy early in your life and are healthy).

Individual Life Insurance: How Much?

The security and peace of mind individual life insurance can provide you and your beneficiaries are worth considering, even if it costs slightly more than a supplemental group life option.

Deciding how much coverage to have is crucial not just because it is financial protection for your loved ones. The level of coverage also impacts how much you are spending. When identifying what your “number” needs to be, think about your income and expenses:

  • Does your partner make enough income to cover your mortgage and sustain their living expenses should something happen to you?
  • If you have children, would you like to fund their education down the road?
  • If you are single, are there any dependents or others you would like to support financially?

In the event of a worst-case scenario, your beneficiaries will be able to use a life insurance payout to fund education, pay off the mortgage, sustain a comfortable lifestyle, etc. Talking this decision through with your financial planner or life insurance agent is a conversation to prioritize.

Carrying life insurance coverage is something we recommend for most of the individuals and families we work with every day. Determining how much coverage you need, and planning for the premium costs, is crucial to protecting your loved ones and ensuring the success of your financial plan down the road.

Grant Lyon, CFP® serves as an advisor at Brighton Jones.

Read more from our blog:


Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Brighton Jones LLC), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained on this blog serves as the receipt of, or as a substitute for, personalized investment advice from Brighton Jones LLC.

To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Brighton Jones LLC is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Brighton Jones LLC’s current written disclosure statement discussing our advisory services and fees is available for review upon request.

Brighton Jones is not affiliated with Facebook, Twitter, LinkedIn, Google+, YouTube or other social media websites and we have no control over how third-party sites use the information you share. Please remember that you should never communicate any personal or account information through social media and it is important to familiarize yourself with their respective privacy and security policies.