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Overall, the face value of life insurance plans offered by employers have kept up with wages in recent years, thus preserving the protection of income over time.
For example, over half of full-time State and local government workers participating in life insurance plans have "flat-amount" coverage, wherein the same amount is payable to all employees regardless of their salary. The average amount rose from $11,200 in 1987 to $18,900 in 1998—a gain of 69 percent. State and local government workers' wages increased by 48 percent in this period.
For employees in medium and large private establishments, the most common method of calculating life insurance benefits has been to base the face amount on earnings. The available data indicate that their life insurance benefits also kept pace with wages in the 1980s and 1990s.
These data on benefits are the products of the Employee Benefits Survey. The face value or amount of a life insurance policy is the amount of money payable to the beneficiaries designated by the employee. Read more in "Have Life Insurance Benefits Kept Pace with Wages?" (PDF 85K), by Jordan Pfuntner, Compensation and Working Conditions, Fall 2000.
Bureau of Labor Statistics, U.S. Department of Labor, The Economics Daily, Life insurance benefits keep pace with wages at https://www.bls.gov/opub/ted/2001/jan/wk4/art01.htm (visited March 28, 2023).