Amid a flood of choices, group life

needs more shelf space and promotion

“One-times salary isn’t enough coverage. If the

employer can’t afford it, they can offer it on a voluntary basis.”

—Dana Newnam

Sales Executive

Guardian Life Insurance Company

By Thomas A. McCoy, CLU

In 1975, 83% of American adults owned life insurance; by 2025, that number had shrunk to 51%, according to LIMRA’s Barometer Study. Over those 50 years, the need for life insurance protection hasn’t changed. The efficiency of delivering life insurance through a benefits plan hasn’t changed. So, why the decline? And what should be done about it?

The workplace is the dominant source of distribution for life insurance coverage. According to Guardian’s 14th annual Workplace Benefits Study (2025), “In the 1990s, employer-provided insurance surpassed individual life insurance (purchased outside the workplace) as the primary distribution channel for Americans.” As of early 2025, nearly two-thirds of those who own life insurance had only employer-sponsored coverage.

One barrier to life insurance growth in the workplace is simply competition. Life insurance must compete for the attention of employers and employees in a market that has been flooded with product innovations, including increased emphasis on retirement products. Life insurance, once the unquestioned starting point for employee security, has moved closer to being just another choice for employers and employees to consider.

Guardian Life’s “Prepared and Protected” report (2023) found that the vast majority of employees ranked medical insurance, retirement savings and paid time off as more important than life insurance. Only 18% indicated that life insurance was “extremely important” to them.

Also, Guardian’s Workplace Benefits Study points out that employers’ offerings of non-contributory life insurance are trending downward—41% of employers paid the entire cost for their employees in 2025, compared to 53% in 2019 and 59% in 2014.

Employers that pay for part of the employees’ life insurance costs have gone from 29% in 2019 to 47% in 2025; 12% offer it as an entirely voluntary benefit.

Further, financial advisors are likely to be concerned with the low amounts of coverage individuals have. Guardian research notes that half of individuals with life coverage have amounts equal only one to two times their annual salary; 36% carry amounts equaling between 3x to 5x their salaries.

How to raise both the number of individuals covered with life insurance and the amounts of their coverage was the topic of a recent Guardian-sponsored webinar. One of the speakers, Dana Newnam, a sales executive at Guardian, acknowledged, “A lot of employers seem to be pulling back on the amounts they are spending on life insurance, and allocating more towards their medical plans, where costs have risen substantially.

“They should be reassessing their employees’ need for life insurance,” she suggested. “One-times salary isn’t enough coverage. If the employer can’t afford it, they can offer it on a voluntary basis. It’s less expensive for the employee buying coverage this way than it would be outside the workplace, and they can get more coverage without having to answer medical questions.”

Mark Hanna, board chair of Life Happens, an insurance industry-supported nonprofit organization that promotes awareness of life insurance needs, advocates using an income replacement formula to determine how much life insurance an individual needs. How much capital is needed now to generate the necessary income for the number of years the beneficiary will need it to live on?

“People mistakenly think they have enough life insurance because they haven’t made this calculation,” he maintained. Hanna’s advice to workers: “Try to get enough term insurance, starting with your employer, add to it with voluntary and worksite marketing, then augment that, if possible, with some personal insurance.

“If an individual has one or two times their compensation of coverage through their employer, they can very affordably raise that amount up to seven times to 10 times their annual compensation by purchasing 10- or 15-year term policies.”

Hanna, who has a 47-year career as a life insurance professional, pointed out at the webinar, “Group term life insurance is generally guaranteed issue up to a certain amount. This feature can be especially important to employees with health problems that would make individual life insurance unavailable or more expensive.

“Employers are allowed to offer up to $50,000 of coverage on a fully-tax deductible basis to the employer and without tax consequences to the employee,” he added. If the employer pays for coverage beyond $50,000, the employee will owe taxes on the incremental cost of coverage above that amount.