- Company life insurance coverage typically totals one or two years of your salary.
- A general rule of thumb is to have at least 10 times your annual income in life insurance coverage.
- Buying additional personal term or permanent life insurance can help fill that gap.
Talking about death with your family can be scary and emotional. It may be tempting to avoid the topic as much as possible. However, it can be just as terrifying to think of passing away and leaving your loved ones without a financial safety net.
In a 2026 USAA End-of-Life Financial Preparedness Study of 1,211 U.S. adults, 55% of respondents considered themselves unprepared if an immediate family member were to die unexpectedly. This ranged from being "not very" to "not at all" prepared.
You might have life insurance through your employer, also called group life insurance. While this coverage is better than nothing, it may not be enough to keep your family financially stable when you're gone. One of the best ways to prepare yourself and your loved ones for an unexpected death is by looking into your employer-sponsored life insurance plan and ensuring you have enough coverage.
Find out how much life insurance coverage your company offers
The first step to finding out whether you have enough life insurance is nailing down the amount you already have through your employer.
Start by looking through your company benefits package. If you are not sure how to find it, you can speak with the person at your company who handles all things benefits — usually an HR representative, says Marianela Collado, CPA/CFS, CFP®, owner and senior wealth advisor at Tobias Financial Advisors.
Employers typically offer life insurance coverage equal to one or two years' salary at little or no cost to you.This is a helpful safety net, but the stakes of having too little coverage can be significant. In the 2026 USAA survey, 42% of respondents said they weren't confident their household could cover unexpected end-of-life costs without taking on debt.
If you want more coverage, ask your HR representative whether the company lets you pay a premium for supplemental insurance. Just remember to shop around first.
While supplemental insurance through your company is worth exploring, it's smart to compare the terms with outside insurance plans. Workplace life insurance premiums often increase as you age, but personal insurance premiums stay the same for decades or even your entire life, depending on which type of policy you get. Also, in many cases, you lose access to employer life insurance if you leave the company, which makes relying only on group insurance risky.
Determine how much life insurance coverage you need
A general rule of thumb for calculating how much life insurance you need is to multiply your annual income by 10 to 15. So, if you earn $50,000 per year, you may want $500,000 to $750,000 in coverage. Another go-to piece of advice is to set aside an additional $100,000 per child. So, if you have two kids, that would bring your desired coverage up to $700,000 to $950,000.
But the amount of life insurance coverage you need depends on your income, dependents, and general life situation.
"These scenarios can go on and on, and it doesn't just have to be solving for children and childcare," Collado says. "It could be that you take care of an elderly parent, and if something were to happen to you, who would take care of them? Do they have to go into a facility? How will that be paid?"
Because each case is unique, it's often a good idea to speak with a financial advisor or estate attorney to determine how much life insurance coverage makes sense for your situation.
How to fill the gap between your company life insurance and the coverage you need
Yes, you might be able to purchase supplemental life insurance through your employer. But the types of life insurance offered are usually limited, and costs increase with age. So, it's a good idea to consider other options.
While there are several niche options, personal life insurance has two main types: term and permanent.
Term life insurance lasts for a set period, such as 10, 20, or 30 years. If you pass away during this term, your beneficiaries will receive the full payout. You can renew the policy once the term expires, but your premiums will probably increase.
Permanent life insurance is usually more expensive than term, but you receive lifetime coverage. It also accumulates cash value. Each time you pay your premium, part of the payment goes toward your death benefit and policy expenses, and the rest goes to building your cash value. You can tap into this cash while you're still alive. Final expense whole life insurance, offered by companies such as USAA, is a type of permanent insurance intended specifically to cover your end-of-life costs.
Term coverage may be enough for your needs. Permanent life insurance could be the better fit if you want to pass money down to your children or want fixed premiums for your entire life. You might also choose to buy both term and permanent life insurance so you can reap the benefits of each.
Company life insurance is a great benefit, but it's rarely enough to set your family up financially should you pass away unexpectedly. Buying additional coverage can ensure you're prepared.
Created by the Commerce Team at Business Insider with USAA.
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