When it comes to getting coverage, you may find that you have employer-sponsored life insurance as part of your package of benefits when working for a particular company. Along with health insurance, life insurance provided by employer is a rather common occurrence and depending on the nature of the policy can be a good or bad thing for the needs of you and your family. In this article, you will learn all you know about life insurance through employer.
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There are certainly advantages with getting life insurance though employer. In fact, the major benefit is that because all of the employees are contributing to the same fund, the overall cost will generally be much lower than if you purchase life insurance by yourself.
Another advantage is that because the company itself is working with the insurance company, you have very little to do other than sign a form and perhaps answer a few questions as there is usually no health exam. This is generally because with so many employees the risk the insurance company is taking is minimized.
Disadvantages of Life Insurance through Employer:
However, employer-provided life insurance is not for everyone and there are issues that you may have with the policy that is provided.
Non-Portable: If you should lose your job, then you will lose the life insurance as well. This means that for those who find themselves unemployed if something should happen there is no coverage that protects the family. However, it must be noted that you may have the option to convert the life insurance from the group policy to an individual one although that will significantly increase the cost.
Unsuitable for your Needs: You may find that the group policy is not suitable to cover the needs of the beneficiaries in case something happens to you. This is because many companies will get lower premium costs by having reduced benefits for those who are covered. Usually in these cases you can get higher coverage, but that will cost an additional amount and may subject you to a medical examination.
Should I Stick with Employer-Sponsored Life Insurance?
This will depend on a number of factors that begin with the needs of your family or beneficiaries, your budget and any special concerns that will need to be addressed. It is true that employer-provided life insurance offers many advantages, even if you do have to add additional features to the policy. However, you will need to make a good examination of your current status to see if this is enough for what you want it to accomplish.
For the most part, young, healthy people may find that this form of group life insurance is enough for them, especially if they are not supporting a family. In fact, for anyone who has no family to support and minimal debts, most employer-sponsored life insurance is going to be enough for their needs as long as it covers burial expenses and any debt that they owe.
However, for those with families to support and large debts such as having a mortgage, then you will want to examine just how far the company life insurance policy actually covers. You may find that calculating your debt and the financial impact on your family may far exceed the benefit coverage that your beneficiaries will receive. In this case, you will need to supplement the policy either by purchasing additional coverage with the same company or by going outside and finding another policy to cover these particular needs.
This will be a difficult decision to make in large part because of the unknowns, but in the long run you are better off with getting the coverage that is needed if your budget can afford to take on another life insurance policy or augment the one you have with your employer. Plus, you must take into account what might happen if you should leave your job and not be covered for the time you are not employed.
Is Depending on Employer-Provided Life Insurance Worth It?
Again, young, single individuals who are just starting out in life and having very little in the way of debt will usually benefit from being under such a policy. There are exceptions of course depending on the income level and amount of debt that has been incurred, but for the most part people who are in this position usually benefit the most from having employer-provided life insurance.
Another factor is the budget because if there is not enough money in your account to pay for an individual life insurance policy, then you will have to settle for the company one at least for the time being. However, those who are in need of better policies should start with the employer first to see if they can augment the benefits without taking too much away from the take home pay.
When Life Insurance through Employer is Not the Right Choice?
Usually employers require all employees to contribute, but that does not meant the employer life insurance on employees is the only policy you can have. You will definitely want your own independent life insurance policy for the following reasons;
- Benefit coverage is insufficient
- Protection when leaving the company
- Better terms or premium payments
All in all, life insurance though employer can offers substantial benefits to those who cannot afford their own policy. Plus, additions to the employer policy can often be made that cost less than getting an independent plan.
However, when it comes to the issues of portability that is the major drawback that employer life insurance offers. When you move to another company, get laid-off or fired means that your family is now without the financial protection that having a life insurance policy would offer at the worst possible time.
So, for those who are concerned about keeping a good life insurance policy if they should leave their employer, finding one on your own should be a top priority so that you can settle into the new policy and create peace of mind for you and your family in case the worst should happen.