Worksite Life Insurance Sales by Line of Business 2025

Worksite Life Insurance Sales by Line of Business 2025

Worksite Life Insurance Sales by Line of Business 2025: Worksite Life Insurance Sales by Line of Business 2025, In the evolving landscape of insurance, worksite life insurance—also known as voluntary or employee-paid life insurance—has become a critical pillar for both insurers and policyholders. As the workforce demographics shift and employers seek to enhance their benefits packages, worksite life insurance continues to gain traction.

Work Life distributes to return to positive growth — between 1% and 5% — in this  2025.

By 2025, this segment has grown into a multi-billion-dollar industry with nuanced trends across different lines of business. This article delves deep into the sales of worksite life insurance segmented by line of business, evaluating growth trends, challenges, key drivers, and future forecasts.

Understanding Worksite Life Insurance

Worksite life insurance refers to life insurance products offered by employers to their employees, typically through payroll deductions. These policies can be employer-paid (group life insurance) or employee-paid (voluntary life insurance). The convenience of automatic payroll deductions, coupled with often relaxed underwriting standards, makes these policies attractive for many employees.

There are typically three major lines of business within worksite life insurance:

1. Group Term Life Insurance

2. Voluntary Term Life Insurance

3. Permanent Life Insurance (Whole and Universal Life)

Each of these product lines serves distinct market segments and plays a unique role in the broader life insurance ecosystem.

1. Group Term Life Insurance

Overview

Group term life insurance is usually employer-funded and provides basic coverage to all eligible employees. Coverage amounts are typically linked to a multiple of salary or a flat amount (e.g., $50,000). The policy remains active as long as the employee is with the company and the premiums are paid.

Sales Trends in 2025

In 2025, group term life insurance continues to be the backbone of worksite life offerings. According to industry estimates, group term life sales in the worksite segment grew by 4.2% year-over-year, reaching $6.8 billion in premium revenue.

Drivers of Growth:

• Rising employer awareness of employee well-being and retention strategies

• Government incentives and tax benefits for employer-provided benefits

• Increasing workforce size in sectors like technology, healthcare, and education

Challenges:

• Limited coverage amounts may not meet employees’ full needs, causing a shift towards supplemental voluntary policies.

• Portability concerns—employees lose coverage when they change jobs unless conversion options are available.

Market Dynamics

Industries with high employee turnover, such as retail and hospitality, tend to invest in basic group term coverage to remain competitive. However, tech and finance sectors are pushing for higher coverage amounts and portability features, influencing insurers to innovate.

2. Voluntary Term Life Insurance

Overview

Voluntary term life insurance allows employees to purchase additional coverage at group rates, often with minimal underwriting. These policies are fully funded by employees and are an essential supplement to employer-paid basic life insurance.

Sales Trends in 2025

Voluntary term life has emerged as the fastest-growing segment within worksite life insurance. In 2025, voluntary term life insurance sales hit a record $8.9 billion, a 6.7% increase from the previous year.

Key Growth Factors:

• Rising employee awareness around income protection and financial planning

• Flexible benefit design, including spouse and child coverage

• Technological innovations that streamline enrollment and decision-making

Digital Transformation:

Insurers are leveraging AI-powered platforms and benefits marketplaces to enable self-service enrollments. This has led to higher participation rates among younger employees and gig workers.

Notable Features Driving Sales:

• Guaranteed issue coverage (up to a limit)

• Flexible coverage increments

• Simplified or accelerated underwriting

Challenges and Opportunities

While voluntary term life is popular, there are concerns around:

• Lack of education and engagement, especially in blue-collar industries

• Volatility in lapse rates, particularly when premiums rise

To address this, insurers are investing in personalized communication strategies and mobile-first enrollment experiences.

3. Permanent Life Insurance (Whole and Universal Life)

Overview

Unlike term insurance, permanent life insurance provides lifelong coverage and includes a cash value component. While traditionally not a large part of the worksite channel, whole life and universal life are gaining attention due to their value propositions.

Sales Trends in 2025

Sales of permanent life insurance through worksite channels totaled $2.3 billion in 2025, marking a 3.1% increase from 2024. Though still a smaller slice of the market, it represents high-margin, low-lapse business for insurers.

Top-selling products:

• Worksite Whole Life Insurance: Offers level premiums and guaranteed cash value accumulation.

• Universal Life (UL): Provides flexible premiums and adjustable death benefits.

• Indexed Universal Life (IUL): Gains popularity due to growth potential linked to market indices.

Trends Driving Sales:

• Financial wellness programs in workplaces highlighting cash value growth and loan features

• Increased interest in estate planning among older employees

• Bundling with long-term care (LTC) riders

Challenges:

• Higher premiums compared to term life, making it less attractive to younger employees

• Complex product structure may require personalized financial counseling

To overcome these hurdles, employers and insurers are collaborating to offer decision-support tools and hybrid policies that blend term and permanent coverage.

Comparative Analysis by Line of Business

Voluntary term life has clearly outpaced the other lines, both in market share and growth rate, driven by employee demand for customizable and portable options.

Employer Perspectives in 2025

Employers are increasingly viewing life insurance not just as a benefit but as a strategic asset to:

• Improve retention

• Support DEI (Diversity, Equity & Inclusion) initiatives by offering benefits tailored to diverse workforce needs

• Promote financial literacy

Many employers have moved from offering a “one-size-fits-all” model to providing tiered life insurance options, where employees can choose from basic, mid-tier, and premium coverage levels.

Regulatory Landscape

In 2025, regulators have adopted a more favorable stance toward worksite insurance, particularly in:

• Simplifying compliance requirements for multi-state employers

• Supporting portability mandates to allow employees to carry their policies post-employment

• Encouraging digital disclosures and e-signatures

These changes have eased administrative burdens and encouraged smaller employers to enter the worksite benefits space.

Insurer Innovations and Market Competition

Leading insurers in 2025 are offering:

• Modular benefits platforms with integrated life insurance options

• AI-driven underwriting, reducing time from application to approval

• Personalized dashboards for employees to track benefits, premiums, and value

Major players like MetLife, Prudential, and Lincoln Financial are competing with insurtech firms like Ethos and Ladder, especially in the digital distribution of voluntary life products.

Demographic & Behavioral Trends

Millennials & Gen Z:

• Prefer flexible, tech-enabled options

• Value transparency in pricing and benefits

• Likely to choose term life, with optional riders for accident, critical illness, and child coverage

Gen X & Boomers:

• More inclined toward permanent life insurance

• Interested in cash value accumulation and estate planning features

• Appreciate the ability to convert term to permanent without new underwriting

Low-income Workers:

• Benefit from guaranteed issue products

• Tend to lapse policies unless premiums are auto-deducted

• Respond well to educational campaigns at the worksite

Forecast for 2026 and Beyond

Based on current trends, the worksite life insurance market is expected to grow at a CAGR of 5.4% through 2028. Key forecasts include:

• Voluntary term life will account for over 55% of all worksite life insurance sales by 2027

• Permanent life insurance will see modest growth, particularly in the hybrid product category

• AI and data analytics will drive hyper-personalized offerings, increasing participation and reducing lapse rates

Strategic Recommendations

For Employers:

• Conduct annual benefits assessments to align life insurance offerings with workforce needs

• Incorporate digital enrollment platforms with educational content

• Offer tiered life insurance packages to cater to varying financial situations

For Insurers:

• Invest in mobile-first and self-service platforms

• Develop bundled policies that combine term, permanent, and supplemental riders

• Partner with financial wellness programs to position life insurance as part of a broader planning strategy

Conclusion

Worksite Life Insurance Sales by Line of Business 2025, Worksite life insurance in 2025 is no longer just a “nice-to-have” benefit—it’s a core component of comprehensive employee well-being strategies. With voluntary term life dominating sales and permanent life carving out a niche, the landscape is more dynamic than ever. Insurers and employers alike must adapt to evolving preferences, regulatory environments, and technological advancements to unlock the full potential of worksite life insurance.

As the market continues to expand, those who prioritize personalization, education, and accessibility will be best positioned to lead the next era of worksite life insurance innovation.