Group Term Life Insurance vs. Individual Coverage: What’s the Right Move?

Group Term Life Insurance vs. Individual Coverage: What’s the Right Move?

In our work with young families, one of the first layers of their financial landscape we assess is life insurance. For most people, there are two ways to put this critical protection in place: through your job’s benefits via group term life insurance and/or on your own with an individual term policy. 

Each avenue differs in a handful of ways. There’s often a clear winner in terms of getting the right mix of protection and value. But it may not always be what you expect… 

In short, your group term life insurance may not offer enough coverage. And even if it provides the needed death benefit, you may be able to save money by getting a policy elsewhere.

So let’s break it down here.

What is Group Term Life Insurance?

Group term life insurance is coverage that is made available to you through your employer, as part of a benefits package. Further, it’s broken into a couple different flavors: basic and supplemental. 

Basic Group Life Insurance

  • It comes at no cost to you, since the employer covers the premium.
  • It is guaranteed-issue (no health screening).
  • Generally, it offers a smaller coverage amount, such as $50k or up to a minimal factor of your salary (like 1.5x salary).
  • The premium amount on the first $50k of coverage paid for by your employer is not treated as taxable income to you. However, any premium amount paid for by your employer on a death benefit in excess of $50k is considered taxable income to you, even though you never receive the cash. This is called “imputed income”.

Here are a couple examples of how this coverage is detailed in a benefits packet:

group term life insurance
group term life insurance

Supplemental (Voluntary) Life Insurance Through the Employer

  • You are fully responsible for the premiums on this coverage.
  • The coverage may be guaranteed up to a certain coverage amount.
  • Additional coverage may be available beyond the guaranteed benefit (up to a stated max) contingent on medical underwriting, though the health screening is often “lighter” than when applying for personal coverage.
  • The premium is simply deducted from your paycheck on an after-tax basis.
  • The coverage is issued with “group rates”, meaning the cost is based on a large risk pool.

Again, here are a couple examples of how this may appear in a benefits packet:

group term life insurance
group term life insurance

Is Group Life Insurance Enough Coverage?

Maybe. Probably not.

Mike goes into depth on several key aspects of life insurance in this blog post, covering: how much to get, when to get it, what type to get, and mistakes to avoid, among others. So I’ll quickly hit a few high points here.

For starters, if someone depends on your income, both now and in the future, it’s worth protecting. AKA, you need life insurance. As far as how much is enough, we have this life insurance calculator you can use to arrive at a true coverage need based on your wishes.

As with anything, life insurance is a personal decision, one that depends heavily on your unique situation, goals, and values. Generally, families want to provide coverage for some combination of:

  • Income replacement
  • Debt
  • Education expenses

The right coverage means that your family’s desired lifestyle and future goals continue to be a reality, even in a worst-case scenario. In many cases, group life insurance won’t offer a benefit high enough to provide full coverage.

Is Group Term Life Insurance a Good Value?

Maybe. Sometimes no.

Even if you could get enough coverage through your employer, it still pays to thoroughly examine the cost of that policy.

Life insurance premiums are based on two main factors: your age and health. In some cases, your health may even disqualify you from getting coverage altogether, outside of a guaranteed-issue policy.

If You Have Health Conditions

A major benefit of group life insurance through your employer is that some amount of coverage will be issued on a guaranteed basis, requiring no “evidence of insurability”. For those who wouldn’t otherwise qualify for life insurance, this is significant. 

Remember that the “basic” coverage amount will be guaranteed. Then, if supplemental coverage is an option, a portion of that is typically also offered as guaranteed-issue. In the example below, any amount over $700k requires a health screening (evidence of insurability). But that means you could still secure up to $700k in death benefit without answering a single health question.

So if this is your only way to get access to coverage, there’s no way to beat the value of getting something vs. nothing.

group term life insurance

If You Are Healthy

Keep in mind that rates for group coverage are based on a large health pool. Essentially, the “average” person. If you’re in good health, it may behoove you to capitalize on that by applying for coverage through a personal policy. There’s a good chance you’d pay less per amount of coverage compared to a group policy through your job, since you’d land a more favorable health rating.

I almost always see this work out in favor of the healthy individual. If that’s you, your group policy may very well NOT be a good value. Look to get the coverage through a personal policy.

Watch Out for Increasing Premiums

Commonly, the premium for supplemental coverage through an employer will increase over time, based on your age. This could mean a very affordable cost while you’re younger. But that can shift quickly as you get older. Check out an example of this in the screenshot below.

Alternatively, it’s possible to obtain a “level premium” term policy when doing so outside of your employer. This means the cost is set for the duration of the policy. Over the course of 10-30 years, this could mean substantial savings if you qualify for a good health rating with a personal policy, even if the group policy is relatively cheaper at the start.

group term life insurance

In short, if you’re healthy, you’ll likely find more value by securing an individual life insurance policy. If you don’t otherwise qualify for coverage, take advantage of all the guaranteed benefit you can through the employer.

Important! If you are going to replace an existing supplemental group policy with an individual one, be sure you’ve paid for and locked in any new outside coverage before dropping the voluntary policy with your job. It’s best to avoid gaps in coverage.

What Happens to Group Life Insurance If You Leave Your Job?

Oftentimes, group coverage is not “portable”. If you separate from your job for any reason, it may not go with you. That’s a big deal, given that life insurance is a major layer of risk protection for your family. We can’t always predict employment separation, since it could include being laid off or fired. It’s not just a planned retirement or quitting. For that reason, we often recommend excluding any employer-based life insurance coverage amount when calculating your need.

If coverage is portable, it will be the supplemental amount (not basic coverage). You need to check with your employer to determine whether or not the policy is portable. Also, know that the rate would likely be different after leaving.

The Complete Group vs. Personal Coverage Comparison Workflow

Here are the steps you should take to navigate this process:

  1. Take what’s given to you for free through your employer (basic coverage).
  2. Determine your true coverage need.
  3. Compare the cost of getting that coverage between a supplemental group policy vs. an individual policy.
    • Once you know how much benefit you need in place, get quotes for an individual policy through an insurance broker.
    • Apply for a policy through the carrier that offers you the best rate and complete any underwriting requirements. You’ll never know your actual cost until you receive a health rating from the insurance carrier, which requires a completed application.
    • If you are denied coverage, then the guaranteed-issue amount of group supplemental coverage is your only way to get meaningful protection.
    • If you receive a low health rating, the supplemental coverage will likely be a better value for you. Then, you’ll need to assess the cost/benefit of paying a relatively higher premium to secure full coverage beyond what the employer policy provides (paying mind to the portability of group coverage).
    • If you land a strong health rating, you will most certainly be in a position where putting an individual policy in force makes the most sense, with no need to pay for supplemental group term life.

A Final Note on Shopping for Coverage

When you go searching for life insurance coverage, we recommend using a broker, rather than an agent who represents only one insurance company. This way, you can compare quotes across several different carriers and increase your chances of getting the most competitive rate for a policy.

While we don’t sell any products at Upbeat Wealth, we do walk through this entire process with our families. In doing so, we can be an objective sounding board to ensure the most appropriate coverage for their unique situation is acquired. No decisions are made alone.

Frequently Asked Questions About Group Term vs. Individual Life Insurance

Q1: Is group term life insurance enough coverage?

In most cases, no. Employer-provided group life insurance typically offers limited coverage (often 1–2x salary), which is usually not sufficient to fully replace income, cover debts, and fund long-term goals like education.

Q2: What is the difference between group and individual life insurance?

Group life insurance is provided through an employer and often has limited coverage and flexibility. A portion of it may be fully paid for by the employer (basic), with the option to purchase more coverage (supplemental). Individual life insurance is a personal policy that you own, totally separate from your employer, with customizable coverage and typically level premiums.

Q3: Is supplemental life insurance through an employer worth it?

It depends on your health and alternatives. If you have health conditions, supplemental coverage can be valuable due to a certain benefit amount being guaranteed issue. If you’re healthy, an individual policy is often more cost-effective over the long-term.

Q4: Do you lose group life insurance when you leave your job?

Sometimes. In many cases, group life insurance is not portable. If it is portable, it’s usually only the supplemental portion and the premiums may change after leaving your employer.

Q5: Why is group life insurance sometimes more expensive over time?

Group policies often have increasing premiums based on age, while individual term policies can lock in a level premium for 10–30 years, making them more predictable and often cheaper long term for healthier individuals.

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Fiduciary, fee-only, Certified Financial Planner, Eddy Jurgielewicz

Eddy Jurgielewicz, CFP® is a Partner and Lead Financial Planner at Upbeat Wealth, a fee-only firm based in New Orleans and serving clients virtually across the country. He specializes in providing straightforward financial guidance to ambitious young families as they navigate life’s many milestones.

Do you have questions about what we shared in this post, or anything else in general? Feel free to schedule a free consultation or drop us a line!

Sign up for our newsletter (at the bottom of this page) to stay up to speed on our Upbeat Insight.

Disclaimer: All content in this article is provided for educational, general information, and illustration purposes only. None of the information is intended as investment, tax, accounting, or legal advice. Nor is it a recommendation for purchase or sale of any security, or investment advisory services. We encourage you to consult with a financial planner, accountant, and/or legal professional for advice on your specific situation. Read our full disclaimer here.

Employee Benefits to Take Advantage of When Expecting a Baby

open enrollment pregnancy benefits

Employee Benefits to Take Advantage of When Expecting a Baby

Traditionally, Open Enrollment is synonymous with health care. Assessing employer-sponsored coverage amid rising costs and premiums. In a previous piece, we provided a checklist to help you evaluate your health insurance options during pregnancy and coordinate with your spouse. But if you’re expecting, here are some lesser-known benefits you should be aware of when reviewing your employee benefits booklet. In this blog, we’ll discuss how to save money on labor & delivery, childcare, and estate planning.

Labor & Delivery: How Hospital Indemnity Insurance May Reduce Hospital Costs

What is Hospital Indemnity Insurance?

Hospital Indemnity Insurance provides a lump-sum payment if you are admitted to the hospital, along with daily benefits during your hospitalization. 

Who Is Elgible for Hospital Indemnity Coverage?

Not all hospital indemnity insurance covers childbirth-related hospitalization or any planned inpatient hospital stay. Some employers offer coverage solely to alleviate some of the financial stress associated with having a baby. Others, not so much. It’s not uncommon to see these plans exclude expected inpatient hospital stays, pregnancy, and/or preexisting conditions. Read your summary plan document or speak with someone in HR before opting into this insurance benefit if you’re unsure which hospitalizations are covered. 

Typical Cost and Payout for Hospital Indemnity Plans

Most larger employers offer this benefit with two (2) options:  a “Low Plan” and a “High Plan”. The “Low Plan” being slightly cheaper with a smaller cash benefit. 

The average cost we see is about $30/month, deducted after-tax from your paycheck. 

For “High Plans”, we typically see a lump sum initial hospitalization benefit of $1,000 and a daily benefit of $100/day. 

Hospital Indemnity Example for Labor & Delivery

A couple is 6 months pregnant in November. Through one of their employers, they have access to Hospital Indemnity insurance. The premium is $30/mo deducted from their paycheck. Therefore, they will pay $360 in 2026 for this benefit. Their benefit for the plan is as shown above: a $1,000 lump sum if either participant is hospitalized and a daily benefit of $100/day. In February, they give birth to their child and spend three nights in the hospital. They submit their hospital bill and receive a cash benefit of $1,000 + ($150 x 3), or $1,450. Since they will pay $360 for the year, they come out ahead by $1,090, which they can put toward their health insurance deductible. 

Wait, It Gets Better

If each partner has access to Hospital Indemnity insurance through their respective employers, there may be no condition preventing them from collecting a cash benefit for the same event. 

What To Watch Out For With Hospital Indemnity Insurance

Most require you to pay into it for the whole year. If you choose to opt out during your Qualifying Life Event enrollment period before receiving your cash benefit, you might lose your eligibility to collect it.

How a Dependent Care FSA Lowers Your Tax Bill

What Is a Dependent Care Flexible Spending Account (DCFSA)?

A Dependent Care FSA is a tax-advantaged account where you can set aside pre-tax dollars to pay for dependent care that enables you to work. 

Dependent Care FSA Eligibility Rules for Married Couples

There is a household limit of $7,500 maximum. This is a household limit, not an individual limit. Therefore, it’s irrelevant whether you have multiple children or access to multiple employer-sponsored Dependent Care FSAs; you can only contribute a total of $7,500 annually for your household. Generally speaking, both spouses must be working and have incomes above the contribution amount. There are some exceptions for full-time students and those who are job hunting. 

Most mid-sized to large employers offer these, and it’s also quite common for small employers to offer them. This is exclusively available as an employee benefit, and there is no other way to contribute to a Dependent Care FSA. 

How Much You Can Contribute to a Dependent Care FSA

There isn’t any “pricing”; it’s just money deducted evenly from your paycheck that you can reimburse yourself for later after proof of claim of an eligible expense. 

Dependent Care FSA Tax Savings Example

A couple knows their daycare costs will exceed the $7,500 DCFSA maximum contribution amount and contributes accordingly. $312.50 will be deducted from their semi-monthly paycheck throughout the year. This couple is in the 24% federal marginal tax bracket and the 3% state marginal tax bracket. Contributions are not subject to federal or most state taxes and are also exempt from FICA taxes (Social Security and Medicare), which have a tax rate of 7.65%. As a result, they reduced their taxes by $2,598.75 ($7,500 x (24% + 3% + 7.65%)) by making the full DCFSA contribution and reimbursing themselves for eligible childcare costs. 

Common Dependent Care FSA Mistakes to Avoid

Like all “Flexible Spending Accounts,” these funds are use-it-or-lose-it. You might be able to carry over a small amount to spend in the following year, but it’s better only to contribute what you’re guaranteed to spend in the current year. Furthermore, informal childcare arrangements, such as paying a family member or babysitter in cash, are not eligible for reimbursement. 

Estate Planning Benefits for New Parents

What Is Group Legal Insurance?

Certain plans provide prepaid legal services and coverage for estate documents, along with various other services such as real estate, adoptions, name changes, court proceedings related to reproductive assistance, and debt collection defense. Here’s a recent blog by Eddy breaking down how to create an Estate Plan.

When to Enroll in Group Legal Coverage?

If your employer offers it, there are no eligibility “gotchas.” However, if this benefit can be added through a Qualifying Life Event, such as having a baby, it likely makes sense to wait until then to take advantage of it. 

Availability: Most mid-sized to large employers offer these. 

Cost Comparison: Group Legal vs. Online vs. Local Attorney

Most often, we see pricing for group legal insurance set at the household level, around $10/pay period. That’s about $240/annually. 

The average cost of a DIY online plan is about $750. 

Hiring a local attorney will likely cost $3,000. 

If your situation is fairly straightforward, using your group legal benefit to have an attorney create a basic Estate Plan for you is a great starting point, especially for young families. 

Estate Planning Example for New Parents

A couple welcomes a baby mid-year. One spouse uses their Qualifying Life Event to add legal coverage for $10 per pay period. They begin the process immediately and, after 2-3 review rounds, complete and sign their Estate Plan before year’s end. This couple has just accomplished a vital planning task for only $120! 

Wait, It Gets Better

Some legal programs may put you in touch with a good local attorney, in which case you receive hands-on assistance at a drastically reduced price compared with contacting them directly. 

Limitations of Employer-Sponsored Legal Plans

The quality of group legal coverage can vary significantly. You might not have access to a local attorney or one you would have selected yourself. When relying on their national team of attorneys, the level of service can differ greatly. We suggest asking colleagues about their experiences with the plan.

Frequently Asked Questions About Employee Benefits for Expecting Parents

Q1: Is hospital indemnity insurance worth it if you’re pregnant?
Yes, hospital indemnity insurance can be worth it if your employer’s plan covers childbirth-related hospital stays. A short hospital stay can result in a payout that exceeds the annual premium, helping offset deductibles and out-of-pocket costs.

Q2: Can both parents collect hospital indemnity benefits for the same birth?
In many cases, yes. If each parent has their own employer-sponsored hospital indemnity plan, there may be no restriction preventing both policies from paying benefits for the same hospitalization.

Q3: Do both spouses have to work to use a Dependent Care FSA?
Generally, yes. Both spouses must be working, looking for work, or attending school full-time. Exceptions exist for full-time students and spouses who are unable to care for themselves.

Q4: How much can a family contribute to a Dependent Care FSA?
For 2026, the household contribution limit is $7,500 per year. This is a household cap, regardless of how many employers offer the benefit or how many children you have.

Q5: What childcare expenses are eligible for Dependent Care FSA reimbursement?
Eligible expenses include daycare, preschool, before- and after-school care, and summer day camps. Informal cash payments to relatives or babysitters typically do not qualify.

Q6: Can group legal insurance help new parents with estate planning?
Yes. Many group legal plans cover wills, powers of attorney, and guardianship documents, making them a cost-effective way for new parents to establish a basic estate plan.

Q7: When is the best time to enroll in new benefits if you’re expecting?

Open Enrollment is ideal, but having a baby is a Qualifying Life Event that often allows you to add or change benefits mid-year, including legal coverage and FSAs.

Great Day Louisiana: Healthcare Terms You Need To Know (originally aired on October 16th, 2025)

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Fiduciary, fee-only, Certified Financial Planner, Mike Turi

Mike Turi, CFP® APMA™ is the Founder and a Lead Financial Planner at Upbeat Wealth, a fee-only firm based in New Orleans and serving clients virtually across the country. He specializes in providing straightforward financial guidance to ambitious young families as they navigate life’s many milestones.

Do you have questions about what we shared in this post, or anything else in general? Feel free to schedule a free consultation or drop us a line!

Sign up for our newsletter (at the bottom of this page) to stay up to speed on our Upbeat Insight.

Disclaimer: All content in this article is provided for educational, general information, and illustration purposes only. None of the information is intended as investment, tax, accounting, or legal advice. Nor is it a recommendation for purchase or sale of any security, or investment advisory services. We encourage you to consult with a financial planner, accountant, and/or legal professional for advice on your specific situation. Read our full disclaimer here.

Term Life Insurance: Protecting Loved Ones and Avoiding Mistakes

Term Life Insurance, Group Life Insurance, Avoid Costly Insurance Mistakes

What is the Greatest Risk to My Family or Loved Ones?

For us in New Orleans, we are intimately familiar with homeowners, flood, and auto insurance. Perhaps “intimately familiar with” isn’t the best way to phrase it. Let’s say “tortured by.” Yeah, that’s better. It’s easy to understand the need. If you own a home that would cost $500,000 to rebuild and owe $400,000 on your mortgage, you’ll likely carry homeowners and flood insurance, regardless of how painful the premiums may be. You don’t want to lose your home while still being responsible for your mortgage payments 25 years from now. 

You purchased that home because you were confident you would earn enough money to live there until you decided to move on someday.

But what if you lost your ability to earn because of death or disability? If someone relies on your income and that income ceases to exist, your loved ones may lose their sense of autonomy regarding housing, transportation, education, and quality of life. Financial goals and objectives that previously seemed attainable may now appear out of reach. 

Here’s the deal: if someone depends on your income, both now and in the future, it’s worth protecting. Please do not leave your ability to financially support your loved ones to chance or a GoFundMe.

And if you’re in your early 20s with no dependents, you likely don’t need to worry about life insurance. It would have to be quite a unique situation otherwise. Therefore, you can tell your friend at—just making up a name—Northwestern Mutual that you’re all set.

Buy Insurance? Surely, There are Other Forms of Risk Protection!

Insurance just feels gross. You pay all this money with the goal of never needing it. So, let’s explore other forms of risk protection to see if there’s an alternative. 

Risk Mitigation: Minimize your risk exposure by avoiding it entirely or implementing protective measures. Easy enough! Kid on the way? Maybe leave the motorcycles, helicopters, skydiving, and deep-sea diving to Tom Cruise. 

Self-insuring: Personally accepting the financial consequences of a risk occurring. Self-insuring can be effective for everyday risks or those that are relatively minor and low risk. For instance, you might not buy travel insurance every time you fly. Or you might build up, say, an emergency fund to protect against losing your job and a temporary loss of income. 

While living a safer, healthier lifestyle sounds great – shit happens. And unfortunately, I’ve participated in far too many of those *shit happened* conversations since starting in this business 14 years ago. You *might* be able to self-insure it, but the odds are low if you’re at the beginning of your career and haven’t had a chance to build up your assets.

Enter Insurance: a Basic Explainer

And here comes the Upbeat Wealth disclaimer: we do NOT sell insurance, so this isn’t a sales pitch. We take pride in our fee-only approach to financial planning, which strives to remove conflicts of interest. This helps us (and you) remain objective, knowing that we are always a fiduciary working in your best interest. This is more of a heart pitch to take care of your loved ones. 

Purchasing Insurance: Transferring the financial consequences of a risk to a third party in exchange for premiums paid. Insurance is usually comprised of these four (4) components: 

Premium: The amount you pay to keep the policy active, typically on an annual basis.

Coverage: The type of risk you are protecting against. 

Benefit: The pool of money left to you or your beneficiaries in the event of a claim.

Term: The duration of time that coverage is provided to the insured.

Term Life Insurance → This is The Way

As you enter your family-building years, Term Life insurance policies are typically affordable, straightforward, and offer substantial benefits to help replace income, which can pay off your family’s mortgage and fund your children’s educational goals. 

If you’re seeking financial stability for your household in case you’re no longer around, term life insurance is the primary option to consider. Using the components of insurance above, here’s how that would translate to a Term Life Insurance policy:

Premium: Annual amount required to maintain the policy. Although there are different types of term life insurance policies, the most popular is the “fixed premium” term life policy, meaning your annual premium will stay the same throughout the duration of the policy. According to NerdWallet, the average rate for a 30-year-old woman to obtain a 20-year, $1,000,000 policy is $374 per year. 

Coverage: Transferring the risk of your premature death to a third party (the insurance company), effectively protecting your future income that you have not yet earned. Later in this article, we’ll discuss more about choosing a coverage amount. 

Benefit: Should you pass away unexpectedly with coverage, your beneficiary(ies) will receive a sum of money equal to the policy’s face value, tax-free! 

Term: The policy will provide coverage for a set amount of time as long as you pay the fixed annual premium. In the example of buying a policy because you have young kids, we aim to align the policy term with the birds leaving the nest. There is also no cancellation policy. So if you experience a sudden money event, such as your company stock soaring or selling your business, thereby accumulating significant assets that your family could comfortably draw from, you could stop paying your premiums and allow the policy to lapse.

Calculating Term Life Insurance Coverage is Part Art, Part Science

When calculating suggested coverage amounts and term lengths, we aim to align the timing of when dependents will be out of the home with the necessary amount to protect after-tax earnings, pay off debts, and fund education. While I believe you should think carefully about the amount of coverage you ultimately obtain, this is one area where I wouldn’t let analysis paralysis consume you. Anything is better than nothing. 

And while having no earned income and applying for a $5M Term Life Policy may raise some red flags, there generally aren’t many restrictions on the amount of coverage you can reasonably obtain. Therefore, the best answer is to go secure the bag at a number where you sleep well at night. For those seeking a more strategic approach to selecting the ideal policy, here’s how we guide households through the process. 

Case Study: 

Muses and Thoth are 35 years old, married, and have one child, who is 2 years old, with another on the way this year. They have a household income of $300,000 comprised of Muses ($225,000) and Thoth ($75,000). They recently purchased a $900,000 home and have $700,000 left on their mortgage. In addition to their mortgage, they have a $30,000 car loan. Muses also has $200,000 in Federal Student Loan Debt. Based on their savings rate, they project to achieve work flexibility by Age 57. 

In this scenario, if we were reviewing Muses’s Life Insurance Need, we would use the following inputs:

term life insurance, group life insurance

Income-Earning Years Remaining: We aim to protect Muses’s net income for her estimated 22 years of earnings. 

Annual Income to Protect: We excluded $40,000 in “personal expenses,” representing the household’s annual savings. The payout from the life insurance policy would effectively replace their need to keep saving. An effective tax rate for a household in Louisiana with an income of $300,000 is approximately 19% federal and 3% state. Since term life insurance benefits are tax-free, we only need to account for the net cash flow to the household rather than the gross amount of income. 

Adjustments: While the S&P 500 Index has returned approximately 10% annually over the past century, we will use a more conservative estimate of 6% for projected investment growth. After considering tax drag (taxes on capital gains, dividends, interest) as well as inflation (the rising cost of goods and services), we arrive at a real rate of return of 2%. 

Current Resources: Muses has employer-provided life insurance of 1x salary ($225,000) through work. However, we will disregard this. Muses doesn’t expect to stay in this job forever, and this policy is not portable. Therefore, when leaving this position, coverage will no longer be available. However, their household currently has $300,000 in investable assets that would be used to help replace unearned wages due to death. We’ll deduct this amount from their Total Life Insurance Need. 

Liabilities + Final Expenses: Canvas ready? Here comes the art of determining your unique needs. Yes, by successfully replacing Muses’s net income, they could reasonably expect to pay off their mortgage according to the original payment schedule. However, Muses expressed, “F that! We just bought this place, and I never want my family to risk losing it.” Muses incorporated this into the death benefit so Thoth could pay off the mortgage and significantly reduce their housing costs. They also decide it’s in their best interest to use the proceeds to pay off the car and cover any funeral expenses. 

Education: Muses and Thoth want to intentionally save enough money to cover the tuition costs of a public four-year in-state college. Using the current tuition cost growing at a 6% inflation rate, they have a present educational need of $166,386. Assuming the funds earmarked for college tuition increase by 8% annually, they will satisfy educational goals for both children. 

Current Remaining Life Insurance Need (today): $3,037,012. 

20-Yr Annual Premium Cost (Preferred Best Health Class): ~$1,200

15-Yr Annual Premium Cost (Preferred Best Health Class): ~$900

From a planner’s perspective, if you’re in good health, that is a small premium to pay to ensure life continues with some semblance of normalcy for your loved ones.

Avoiding Common Life Insurance Mistakes

Don’t rely too heavily on your employer’s group life insurance benefits. Just because you have employer-paid life insurance or access to additional voluntary insurance doesn’t mean you’re fully covered. Group term life insurance policies are typically NOT portable. If your employment status changes, you will lose this coverage. Moreover, your health may change, making qualifying for a preferred rate more difficult than when you were younger and, perhaps, healthier. Securing voluntary coverage through your employer can be beneficial if you have a pre-existing condition that impacts your health class rating, as there is typically a specific amount of voluntary coverage you can obtain without undergoing medical underwriting. However, if you are young and healthy, you will likely pay more for voluntary coverage through your employer than if you purchased a policy privately. 

If expecting a baby, do not wait until the third trimester to apply for term life insurance. Even if you are having a low-risk pregnancy, insurance companies may underwrite you differently as you get further along. This can be a costly mistake throughout the duration of a policy that could have been avoided by merely mistiming the application by a few weeks. 

While we understand that children are dependents, we shouldn’t overlook aging parents. If you’re part of the sandwich generation, they might also rely on you for care. 

Even if one spouse is a stay-at-home parent with no earned income, there is likely still a need for life insurance. Close your eyes and relive the wonder of what single-parenting looks like when your significant other is gone for a weekend. Yeah, you’re probably going to have some additional childcare costs. 

Overinsuring yourself, especially if no one is actually relying on your income. If you don’t need life insurance, don’t purchase life insurance. One unique situation where you might still consider it is if you have a hereditary disease that hasn’t taken hold but is known to be passed down in your family. Perhaps you still plan on having dependents one day, and it makes sense to get ahead of something that might be pre-existing. 

Another area where I see folks overinsuring is with their kids. Losing a child is an unimaginable tragedy, but they don’t require an insurance policy on their life, especially one that combines insurance with investing. Instead, just invest for them. And in a poor attempt to lighten the mood, feel free to ignore this if your little one is in a deep sports gambling hole with a bookie. Sorry…

And finally – be cautious of sales pitches that seem too good to be true, particularly those that combine insurance coverage with retirement investing. This is an article for another time, but just remember that good products are bought while bad products are sold.

Looking for more risk protection tips? Here’s our risk checklist! 

Great Day Louisiana: Learn To Avoid Insurance Mistakes (originally aired on February 20th, 2025)

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Fiduciary, fee-only, Certified Financial Planner, Mike Turi

Mike Turi, CFP® APMA™ is the Founder and a Lead Financial Planner at Upbeat Wealth, a fee-only firm based in New Orleans and serving clients virtually across the country. He specializes in providing straightforward financial guidance to ambitious young families as they navigate life’s many milestones.

Do you have questions about what we shared in this post, or anything else in general? Feel free to schedule a free consultation or drop us a line!

Sign up for our newsletter (at the bottom of this page) to stay up to speed on our Upbeat Insight.

Disclaimer: All content in this article is provided for educational, general information, and illustration purposes only. None of the information is intended as investment, tax, accounting, or legal advice. Nor is it a recommendation for purchase or sale of any security, or investment advisory services. We encourage you to consult with a financial planner, accountant, and/or legal professional for advice on your specific situation. Read our full disclaimer here.