What is Basic Life EE? A Guide to Employer-Sponsored Life Insurance

Many companies offer basic life insurance coverage to their employees as part of their benefits package. This employer-sponsored life insurance is also referred to as group life insurance or “basic life EE.”

But what exactly is basic life EE and how does it work? Below we’ll explore the key things employees should know about this common workplace benefit.

What is Basic Life Insurance?

Basic life insurance is a small, limited life insurance policy that employers provide to their workforce. It typically has the following features:

• Covers all eligible employees under a group plan obtained by the company
• Requires little or no cost for employees
• Provides relatively low coverage amounts (e.g. 1-2x annual salary)
• Doesn’t require medical exams to qualify
• Offers term life insurance that ends when employment terminates

Employers foot the bill for basic life EE as an employee benefit. Some companies cover the full cost while others require workers to contribute a small portion. But either way, basic life is much cheaper than buying individual life insurance.

It provides employees with basic protection to cover final expenses and support dependents in the event of untimely death. But coverage maximums are usually inadequate for most people’s needs.

Who Gets Basic Life Insurance?

Basic life EE is a common benefit at many types of companies. Both large corporations as well as small businesses offer it. According to the Bureau of Labor Statistics, 33% of private industry workers have access to basic life insurance through their jobs.

Eligibility requirements for basic life coverage vary by employer. But most companies extend coverage to:

• Full-time employees who work over 30+ hours per week
• Part-time staff who meet minimum hourly thresholds
• Salaried workers
• Union employees

Companies can choose to cover all classes of workers or limit participation. Basic life EE may not be available to temporary employees, independent contractors, or those in high-risk roles. Spouses and dependents aren’t eligible.

How Much Coverage Do You Get?

Basic life insurance coverage amounts differ by employer. But most companies offer a death benefit equal to:

• A flat dollar amount (e.g. $15,000 – $100,000)
• A multiple of your salary (1x – 2x)
• A set schedule based on job level

So for example, a company could provide:

• $50,000 to all employees
• 1x salary for managers and 2x salary for executives
• $30,000 for support staff, $60,000 for professionals, $100,000 for managers

Average coverage falls in the range of 1–1.5x annual earnings. Maximums often cap at $200,000-$300,000.

Your HR department can provide details on the exact amount of basic life EE available.

Policy Duration and Portability

Basic life insurance offered by employers is usually group term life insurance. This means coverage expires when you leave your job.

If your employment is terminated, you can typically convert your basic life to an individual policy. But you’ll pay much higher premiums than the company rate.

Most basic life EE plans are not portable. This means you can’t take the group coverage with you if you switch employers.

So while basic life provides security against unexpected loss of income while working, it does not offer lifelong protection.

Advantages of Basic Life EE

Here are some potential benefits of having basic life insurance through your employer:

• Low or no cost: Companies cover all or most of the premiums so it’s very affordable insurance.

• Easy enrollment: Signing up is simple with no health exams required. Coverage is guaranteed as long as you’re eligible.

• Some coverage is better than none: Basic life EE provides at least a minimal death benefit for final expenses.

• Tax benefits: Life insurance benefits are generally not taxable income up to $50,000.

• Option to add more: Some employers let you buy extra coverage in addition to the base amount.

Disadvantages of Basic Life EE

While basic life insurance can be valuable, it also has some drawbacks:

• Limited benefit amount: The death benefit is usually inadequate to replace income for dependents.

• Coverage ends if you leave: Group life insurance is not portable when you change jobs.

• No cash value accumulation: Basic life is purely term insurance with no investment component.

• No customization: You cannot adjust the benefit amount or policy terms.

• No guaranteed renewability: Employees can lose coverage if employers change plans.

For these reasons, basic life EE works best when combined with adequate individual life insurance tailored to your needs.

Purchasing Additional Coverage

Because basic life insurance coverage maximums tend to be low, many employees buy extra insurance. There are two main options:

1. Supplemental Group Life

Some employers give staff the option to purchase additional group life insurance through their benefits program. Like basic life, this supplemental coverage requires no medical underwriting. Up to $500,000 in total coverage may be allowed when combining basic and supplemental amounts.

2. Individual Life Insurance

Purchasing an individual life insurance policy from an insurer lets you get fully customized and portable coverage. Your employer plan is not required. However, you will need to undergo medical underwriting.

Getting quotes for term, whole, and universal life insurance lets you find the right plan to supplement basic life EE.

Basic Life Insurance Takeaway

While basic employer-provided life insurance is a helpful benefit, it should not be your only coverage. Combining it with private life insurance ensures you have adequate protection tailored to your family’s unique needs.

Be sure to calculate the specific income replacement and expenses you would like covered. This makes it easy to determine how much supplemental individual life insurance to purchase beyond the basic life EE from your employer.

Frequently Asked Questions

What is basic life insurance?

Basic life insurance is a small group term life insurance policy employers provide to their workers as an employee benefit. It offers limited coverage with death benefits typically 1-2x annual salary.

How much does basic life EE cost?

Most employers provide basic life insurance at little or no direct cost to employees. Companies usually pay all or most of the group policy premiums themselves.

Who gets basic life coverage?

Eligibility for basic life EE varies by employer. But it is commonly offered to full-time and some part-time employees once they meet minimum hour thresholds. Independent contractors are generally not eligible.

What if I leave my job?

If you leave your job, you usually can convert your basic life EE policy to an individual life insurance plan. However, you will have to pay much higher premiums than the employer group rate.

Should I get more than basic life insurance?

Most experts recommend getting supplemental individual life insurance to ensure you have adequate coverage that meets your family’s needs. Basic EE death benefits tend to be inadequate.

Can I take basic life with me to a new job?

Unfortunately basic life insurance is not portable when you switch employers. The coverage ends when you terminate employment unless converted to a private policy.