Typically, it is only $50,000 of life insurance that is available for free through your employer while not being taxed. If the employer covers anything above that amount, there could be a taxable event. Please speak with your tax advisor to know for sure.
Generally, if you insure for dependents on the private side, your life insurance payments are tax-free to them if something were to happen to you.
This is all depending on who owns the policy but this is another reason people buy their own policies. So that they know how much is provided tax-free to their beneficiaries.
Often the work plans are not portable so once you leave that employer, that coverage would be gone.
The solution is to have the free work plan but to then have your own policies, outside of work if you are eligible to do so. Some health histories are not eligible for life insurance so they must rely on work plans.
In summary, if you can, try to get both in place. My clients that have both policies feel more secure.
Need a policy review? I am happy to help!
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