If life insurance appears on your employee benefits statement, it can be easy to check the box and move on. You have coverage. Your employer may pay some or all of the premium. Enrollment may require little effort, and you may not need to complete the same underwriting process associated with an individual policy.

Those are meaningful advantages. Workplace life insurance can provide valuable protection, especially for someone who may not yet have coverage elsewhere. But having life insurance through work and having enough life insurance are not necessarily the same thing.

A Valuable Benefit — and a Common Blind Spot

Workplace life insurance plays an important role for millions of American families. Yet the amount provided may be more limited than employees realize. LIMRA reports that the median basic coverage available through the workplace is either a flat $20,000 benefit or an amount equal to one year of salary.

That money could certainly help a family. But how long would it last after accounting for funeral expenses, household bills, debt, childcare, housing costs, and lost income? Workplace life insurance can be a valuable starting point, but a starting point is not always a complete plan.

Workplace life insurance can be a valuable starting point, but a starting point is not the same thing as a complete plan.

Your Coverage Amount Deserves a Closer Look

Many employer-sponsored plans offer a basic amount of coverage automatically. Others allow employees to purchase additional coverage during benefits enrollment. Either way, it’s important to look beyond the fact that you are enrolled and identify the actual death benefit your family would receive.

Compare the benefit with the financial responsibilities your family could face. Would it help pay off — or continue making payments on — the mortgage? Could it replace your income for more than a few months? What about childcare, education, healthcare, debt, or support for aging relatives?

Your employer knows your salary, but it does not know your family’s mortgage, debts, goals, or caregiving responsibilities. Those personal details matter when determining how much protection may be appropriate.

Start With What You Want to Protect

It is easy to approach life insurance by asking, “How much can I afford?” A more useful starting point may be, “What would the people I care about need if I were no longer here?”

Consider the financial responsibilities your income currently helps support:

• Housing payments.
• Groceries and monthly bills.
• Childcare.
• Education expenses.
• Debt payments.
• Support for aging parents or other relatives.
• Future savings goals.
• Funeral and final expenses.

Life insurance can help provide financial support when a household loses not only a loved one, but also the income, labor, caregiving, and stability that person contributed.

Once you understand what needs protecting, a financial professional can help you explore different amounts, policy types, and time frames. You may find that there are multiple ways to build meaningful protection around the amount you are comfortable paying.

What Happens When the Job Changes?

Another important consideration is ownership. Workplace life insurance is generally connected to your employment. Depending on the terms of the plan, you could lose the coverage if you change jobs, retire, are laid off, reduce your hours, or if your employer changes or discontinues the benefit.

Some policies may allow you to continue or convert coverage after leaving your job, but the options, deadlines, and costs can vary. It’s important to understand the specific terms of your plan before assuming the coverage will follow you.

This can be especially significant because a future individual policy may cost more as you age. Changes in your health could also affect the coverage available to you and what you pay. If your protection disappears when your job does, your financial plan may be less secure than it appears.

An individually owned policy can provide better coverage because it’s not dependent on remaining with a particular employer. For some households, the strongest approach may be using workplace coverage as one layer of protection and an individual policy as another.

Convenience Can Hide a Coverage Gap

Employer-sponsored life insurance is easy to overlook precisely because it is so convenient. You may enroll when you begin a job and rarely think about it again. The benefit becomes one more line on a form instead of an active part of your financial strategy.

Meanwhile, your life continues to change. You may get married, purchase a home, have children, take on debt, begin supporting a parent, or become the household’s primary earner. Your workplace benefit may remain exactly the same while the financial need surrounding it grows.

Convenience can make workplace coverage feel complete, even when the numbers tell a different story. That does not mean you should decline a valuable employee benefit. It means the benefit should be reviewed within the context of your full financial life.

Give Your Workplace Coverage a Reality Check

A workplace coverage review does not have to be complicated. Begin with three steps:

1. Confirm What You Have

Review your benefits statement or speak with your human resources department. Identify the coverage amount, cost, beneficiary, supplemental options, and what happens to the policy if your employment ends.

2. Estimate What Your Family May Need

Consider income replacement, housing, debt, final expenses, childcare, education, and other responsibilities. Think not only about the first few months after a loss, but also about the years that could follow.

3. Explore Ways to Address Any Shortfall

A financial professional can help you compare your existing benefit with your broader needs and explore whether supplemental workplace coverage, an individual policy, or a combination of both may be appropriate.

The most important number on your benefits statement is the gap between what you have and what your family would need.

The most important number on your benefits statement is the gap between what you have and what your family would need.

Life insurance through work is worth having. It can be affordable, convenient, and an important source of protection. But the ease of enrollment should not create a false sense of security.

Take the time to learn how much coverage you have, how long it could realistically support your family, and whether it would remain with you through a job change. If there is a gap, you do not have to solve it alone.

This Life Insurance Awareness Month, give your employee benefits a closer look.