Employer sponsored Life Insurance (aka Group Life) is a common and popular component of most mid to large size company’s benefits plans.
That’s not surprising, since a 2013 LIMRA study found 85% of consumers think most people need Life insurance.
However, over 1/3 of all consumers still don’t believe they have enough Life insurance.
Where do you fit?
Employer-Provided Life Insurance and 3 Key Limitations
Employer-provided Life insurance can be an affordable benefit. Typically, a company will contribute toward paying for Life insurance for their employees (and employee families in smaller increments).
These costs typically are deducted (after tax) from their paychecks, all without a medical exam. This makes employer-provided coverage an affordable option, even for those with less-than-perfect health.
To keep costs down though, and deliver benefits to everyone, company-provided Life insurance has it’s limitations and drawbacks:
• Restricts your coverage and additional options to small amounts (typically up to 2X your salary).
• Terminates if you terminate employment – they will not travel with you if you leave your job.
• End suddenly if your company discontinues the policy, or increases in premium annually if group experience deteriorates.
While these plans do benefit employees and help families in tough times, far too many households rely on them as their sole source of Life insurance.
That means employees are typically not carrying enough coverage, or perhaps none at all (especially in single-income households), leaving loved ones exposed to potentially harsh financial impact.
It also means 30%+ of consumers are right…they are underinsured. That’s especially true as most financial experts recommend having Life insurance for at least 8X-10X your annual salary.
Personal Life Insurance vs. Employer-Provided Coverage
Personal Life insurance plans are another coverage option that you can purchase directly from an insurance provider outside the benefits plan of your employer.
—>>> Personal Life insurance policies don’t have the same drawbacks and restrictions as employer-provided plans. They may also supplement and fill gaps in your employer’s coverage by:
1. Allowing you to choose the insurance provider
Personal Life policies are a direct relationship between you and an insurer you choose.
—>>> Of course I always recommend leveraging the services of a seasoned and licensed professional as there are many facets to consider in choosing the right type of policy and benefits,
2. Providing consistent coverage
Unlike Employer-provided life insurance policies, Personal life policies are not dependant upon your employment status. Consistantly pay the premiums and your policy continues to cover you and your family – it’s that simple.
3. Delivering expanded limits and coverage options
Personal Life policies offer a wider variety of options and limits to choose from, and aren’t as restricted as an employer-provided policy might be.
Take some time and evaluate what limits you might need to cover the mortgage, your kids’ educations and other debt or expenses.
—>>> Income replacement – do you want to provide your family with a specified number of years of replaced income? It’s easily accomplished under a personal insurance policy.
4. Locking in rates and saving money in the long term
Personal plans may be more expensive than the cheap and sometimes free benefits provided by your employer.
However, with the restrictions and coverage gaps, you may find employer-provided plans more costly in the long run if they’re your only Life insurance.
This is especially true if a medical condition forces you to leave your job, you become disabled and are unable to work, or you become ill between jobs.
With personal Life insurance, if you obtain coverage when you’re young and healthy, you have a better chance of locking in a good rate, and remaining covered when you actually need it.
—>>> This approach also guarantees your insurability, provided you keep the policy in force by paying the premium.
Do You Have Enough?
If your employer provides a Life insurance policy benefit, this is a great place to begin. After all, when it comes to Life insurance, some coverage is always better than no coverage.
In fact, I always recommend taking the highest coverage option available from you employer.
For some, like a single person without dependents, or those in multi-income households, this affordable limited coverage may be enough – provided you are willing to bear the risks associated with only carrying a group policy.
However, if you have children, dependents, or rely on a single income, limited, non-transferable Group Life insurance may not provide the coverage you want.
–>>> Consider a personal Life insurance policy to help fill the gaps in your coverage, and protect your family when they need it most.
Give us a call – we can help guide you to the right plan that best fits the needs of your family. You can also Get a Quote by completing a few short questions via the Get a Quote box to the right.