Workplace Life Insurance Is Rebounding — But Coverage Gaps Remain

When open enrollment season rolls around, workplace life insurance is often the first checkbox employees tick — and the last one they think about again. But as the Federal Reserve’s latest rate cut ripples through the economy, something unexpected is happening: employer-provided life insurance is quietly making a comeback.

According to LIMRA, group life insurance sales grew 1% in the second quarter of 2025 after several quarters of decline. More employers are bringing these benefits back, especially mid-sized companies looking to retain workers.

But here’s the catch — while participation is improving, millions of workers still don’t have enough coverage to actually protect their families if something happened to them.

What’s Driving the Rebound

After a few years of tight budgets and reduced benefits, more employers are expanding coverage again. New LIMRA data shows a steady recovery in workplace insurance premiums, reaching roughly $666 million in Q2 of 2025 — modest growth, but a sign of renewed interest in financial protection benefits.

With inflation cooling and hiring stabilizing, companies are revisiting benefits packages to keep employees from jumping ship. Life insurance is an affordable way for them to show support and loyalty to their teams.

Still, the story beneath the headlines is more complicated. While coverage is rebounding, most employees remain underinsured — meaning the payout from their job’s life insurance plan wouldn’t be enough to replace even a year or two of their income.

Why Relying on Your Job’s Life Insurance Can Be Risky

For many people, their only life insurance comes through work. It’s easy and convenient — no health exam, no long application, and no cost or a small deduction from your paycheck. But that convenience can hide major limitations:

1. It’s rarely enough.

Most employers offer 1–2 times your annual salary in coverage. That might sound like a lot, but if your income is $60,000, your family might only receive $60,000–$120,000 — not nearly enough to replace your income for long.

2. It doesn’t follow you when you leave.

If you change jobs, get laid off, or switch to self-employment, that coverage usually ends. Some plans allow “conversion” to an individual policy, but it can be expensive.

3. It’s not tailored to your needs.

Workplace coverage doesn’t account for your family size, debts, or financial goals. A single person with no dependents might not need as much coverage as a parent of three — but everyone at the company usually gets the same base amount.

4. It creates a false sense of security.

Because it’s automatic, many employees assume they’re covered “enough.” Unfortunately, that’s often not the case when a family’s expenses are tallied after a loss.

The Numbers Tell the Story

Even with the rebound, large coverage gaps remain:

• 49% of U.S. adults have no life insurance at all, according to MoneyGeek.
• Among part-time or gig workers, almost 60% have zero coverage through work.
• For those who do, the average benefit is less than $100,000 — far below what most families need.

That means millions of families could face major financial stress if the main earner passed away — even if they had “some” coverage through work.

What You Can Do to Protect Your Family

1. Check your workplace coverage amount.

Find out exactly how much life insurance your job provides. You can usually see it on your benefits summary.

2. Calculate your real need.

As a general rule, most families need 7–10 times their annual income in life insurance to replace earnings, cover debts, and keep their household stable.

3. Consider supplementing with your own policy.

Your job’s policy is a great start — but think of it as a foundation, not the full structure. An individual life insurance policy stays with you no matter where you work and can be customized to your family’s needs.

4. Don’t wait for open enrollment.

You don’t have to wait for HR to offer it. You can compare individual life insurance quotes anytime, even while you’re covered through work.

The Bottom Line

Yes — workplace life insurance is rebounding. That’s good news. But the gap between “some coverage” and “enough coverage” is still wide.

For many families, a small work benefit provides peace of mind — but not financial protection. If your loved ones rely on your income, it’s worth reviewing what your employer provides and adding coverage that truly protects them.

Because when you think about it, the purpose of life insurance isn’t just a benefit — it’s a safety net your family can count on, no matter where life (or work) takes you.