The life insurance market in the U.S. is facing a major challenge. Only around half of Americans has a life insurance policy. Even among those who do have life insurance, 30 million don’t have sufficient coverage to protect their families in the event of their deaths. This is partly because many of these individuals rely on the inadequate group life insurance offered by their employers.

The life insurance industry must make some significant changes if employers want to provide adequate life insurance benefits to employees. Those changes can come only if insurers and businesses team up and embrace new innovations in insurance technology.

Here’s what you need to know about the problems with group life insurance today and how to make a difference.

The problems with the current model

Group life insurance is the model through which many employers provide coverage to workers as a group, rather than coverage personalized to individuals’ needs and preferences. The low cost of group life insurance, and the fact that it’s available to any employee with any level of health or financial stability, makes it a popular option for companies. The group policy is owned by the employer and the employees are covered via certificates. The coverage is not portable, meaning individuals can’t retain these life insurance policies when they change jobs.

Furthermore, group coverage generally comes in very low amounts. Group life insurance usually provides coverage amounting to one to two times an individual’s annual income, which is nowhere near enough to provide financial protection for families after a death.

Unfortunately, lack of education regarding alternatives — in particular, purchasing their own individual life insurance — prevents many individuals from seeking better coverage. This may be due to the public’s misconceptions the public have about the cost of life insurance. More than half of Americans – millennials in particular - significantly overestimate the cost of life insurance. As a result, many people mistakenly believe that they can’t afford individual life insurance.

Group life insurance brings inconvenience for businesses as well. Since the payout for group coverage is generally very low, employers can offer employees the chance to purchase supplemental insurance. Because this coverage is still through the workplace, it may not be portable and the employer will have to manage payroll deductions to pay the insurer. Plus, supplemental life insurance often requires extra paperwork, a long application and approval process, and more. All in all, the current model isn’t doing any favors for workers or for their employers.

Changes for the better

Here’s what insurance should look like for employees. Employers should continue to provide a base amount of employer-sponsored group term life. However, employers should provide employees with access to individual life insurance. These policies are owned by the employee, personalized to their needs, and portable.

The premiums for such policies are based on the health of the individual, so any employee with good health can rely on low premiums and a fairly straightforward approval process. And the employees have full control over the policy, so they choose the length and amount of coverage.

Unfortunately, individual insurance policies have some of their own challenges, mainly in the area of difficulty obtaining approval from an insurer. Some insurers still require invasive medical exams and complex paperwork in order to process an individual insurance policy. Processing can take weeks or months.

Second, employers should educate workers on the need for additional coverage and the limits of group policies. For one thing, many employers don’t realize that their insurance policies aren’t portable until they lose their coverage.

With more partnerships and better education for workers, employers will benefit because they don’t have to worry about any additional administrative burden or payroll deductions. Insurers will benefit because more employees will realize their need for individual life insurance as well as their ability to afford it. And ultimately, employees will benefit because they’ll have more coverage to ensure financial stability for their families.

Bob Gaydos is CEO and founder of Pendella. He may be contacted at [email protected].

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