LIMRA, the largest trade association supporting the insurance and financial services industry, published its 2026 workplace benefits outlook earlier this year -- and the message is one of caution. After several years of strong post-pandemic growth in employer-sponsored life and disability insurance, the industry is entering a period of slower expansion driven by rising health care costs, cooling employment growth, and persistent inflation.
The Core Problem: Health Care Is Crowding Out Other Benefits
According to LIMRA's analysis, health care costs are projected to rise 8% in 2026 for employers that make no plan design changes. As health coverage consumes a larger share of total compensation budgets, employers face difficult choices: shift more costs to workers, reduce coverage levels, or scale back other benefit offerings like life insurance and disability. LIMRA's Benefits Employee Attitude Tracker (BEAT) study found that workers already prioritize health, dental, and vision coverage -- often sacrificing "extras" to afford those essentials.
Slowing Employment Growth Dampens Premium Volume
Group insurance premiums are tied directly to workforce size. With U.S. employment growth projected to fall below 1% annually from 2026 through 2028, there are simply fewer new workers being added to group plans each year. LIMRA forecasts that life insurance in-force premium growth will fall below historical averages over this period, while long-term and short-term disability premiums should remain closer to recent norms -- suggesting disability coverage is holding up better than life.
Worker Attitudes Are Shifting
"Although the pandemic enhanced awareness of the value and the need for insurance benefits, we've seen that urgency decline over time," said Grace Rafferty, corporate vice president and director of LIMRA Workplace Benefits Research. LIMRA's data shows that while 84% of employers believe benefits are critical for attracting and retaining workers, and 83% of workers expect a wide variety of benefits, inflation is eroding budgets on both sides. Many workers report that rising prices still outpace their wage gains, leaving less room for voluntary benefits like supplemental life insurance and disability coverage.
What Employers Are Likely to Do
LIMRA's research suggests employers -- particularly smaller ones -- are increasingly considering shifting from employer-paid benefit plans to voluntary (employee-paid) benefit structures. This means the benefit remains available, but the premium cost moves from the employer's payroll to the individual worker's paycheck. For employees, this makes understanding what you actually have -- and what gaps exist -- more important than ever.
What Workers Should Check Right Now
Given this environment, it is worth doing a personal audit of your workplace coverage:
- Group life insurance amount: Many employer plans offer only 1x annual salary as a base benefit -- far less than most financial advisors recommend (typically 10-12x salary for those with dependents).
- Disability income replacement rate: Standard long-term disability policies replace 60% of pre-disability income. Check whether your plan covers base salary only or total compensation.
- Portability: If you leave your job, does your life or disability coverage travel with you? Group policies typically do not.
- Voluntary buy-up options: If your employer offers supplemental coverage during open enrollment, this is typically the lowest-cost time to add it -- often without medical underwriting.
The Individual Market Fills the Gap
If your employer's group life coverage is below what your family would need, an individual term life policy is worth pricing. LIMRA notes that younger adults often overestimate the cost of coverage by more than tenfold -- a healthy 35-year-old can typically get $500,000 in 20-year term coverage for less than $30 per month.
Use our Life Insurance Calculator to see how much coverage your situation calls for, and our Disability Insurance Calculator to check whether your workplace policy leaves an income gap.
The Voluntary Benefits Shift: What Workers Need to Understand
The trend toward voluntary benefit structures — where the employer makes coverage available but shifts the premium cost to the employee — has significant implications that aren't always clearly communicated during open enrollment.
When you pay group life or disability premiums with post-tax dollars (as is common with employee-paid voluntary benefits), the tax treatment differs from employer-paid benefits:
- Life insurance: If your employer pays the premium for group life insurance above $50,000, the cost of that excess coverage is imputed income on your W-2. If you pay the premium yourself, there's no imputed income. If you pay with post-tax dollars, the death benefit is received income-tax-free by your beneficiaries.
- Disability insurance: The tax treatment of disability benefits depends entirely on who paid the premium. If your employer paid — which is the standard for employer-provided LTD — your disability benefit is taxable income when you receive it. If you pay the premium with after-tax dollars (common in voluntary benefit structures), your disability benefit is tax-free. The net income replacement rate is meaningfully higher when you pay the premium yourself.
As employers shift more benefits to voluntary, employee-paid structures, the tax implications improve for some workers — particularly for disability benefits. But the immediate cash cost also rises. Understanding this tradeoff helps workers make better decisions during open enrollment.
Benchmarking Your Workplace Coverage
LIMRA's finding that 84% of employers believe benefits are critical for retention, against a market where benefit quality is genuinely diverging, means the variation in what workers receive has increased. Benchmarking your coverage against typical market standards helps identify gaps worth addressing.
Typical workplace coverage benchmarks for 2026:
- Group life insurance: 1–2x annual salary is typical as a base employer-paid benefit. Financial planning guidance generally recommends 10–12x salary for workers with dependents — meaning employer coverage alone is almost always insufficient for families with financial obligations.
- Short-term disability: 60–70% of base salary for up to 12–26 weeks. Note that STD typically covers base salary only — bonuses, commissions, and overtime are often excluded from the covered compensation base.
- Long-term disability: 60% of pre-disability income is the standard benefit, kicking in after the elimination period (typically 90 days). The group plan's monthly benefit cap — commonly $5,000–$10,000 — is often the binding constraint for higher earners.
- Supplemental life insurance (buy-up): Many employers offer employees the ability to purchase additional life insurance (typically 1–5x salary) at group rates without medical underwriting up to a guaranteed issue limit. This is often the best available deal for additional individual coverage — do not overlook it during enrollment.
Open Enrollment Strategy in a Tightening Benefits Environment
Given LIMRA's forecast of slowing benefit growth and potential shifts toward voluntary structures, approaching your next open enrollment more deliberately than in prior years is worthwhile:
- Read the Summary Plan Description: The SPD is the legal document governing your benefits. It defines covered compensation for disability, the definition of disability your plan uses (own-occupation vs. any-occupation), and any benefit offsets (e.g., for SSDI payments). Most people have never read it.
- Model your disability gap: Calculate what your take-home pay would be on your group LTD benefit — remember it's taxable if employer-paid — and compare it to your actual fixed expenses. The gap is what individual disability coverage needs to fill.
- Enroll in supplemental buy-up life insurance during your first enrollment opportunity: Many plans allow guaranteed-issue buy-up only during your initial eligibility window. Missing that window means you'll need to provide evidence of insurability (medical underwriting) to add coverage later — which may not be available if your health has changed.
- Consider adding voluntary coverage you've been skipping: Accident, critical illness, and hospital indemnity policies offered through employers are often priced favorably through group purchasing. They're not substitutes for major medical, disability, or life coverage — but as supplemental layers they can bridge gaps during specific types of events.
Use our Life Insurance Calculator and Disability Insurance Calculator to benchmark your workplace coverage against your actual household financial needs.