Other that health insurance, employer paid life insurance is a benefit that employers sometimes offer to their employees as part of their employee benefits package. While the benefit amount is usually not a lot, it’s still a great benefit to have and it’s a great benefit for employers to offer.
But it’s a good idea to have addition life insurance besides the one your employer offers that you can control. Let’s look at five reasons why.
1. A life policy paid for by your employer usually has a low benefit. While it may be enough to take care of burial expenses, it may not be enough to take care of your family after you are gone.
2. An employer can end the benefit at any time as was the case at Sear’s when they cancelled life policies for eligible retirees. Some didn’t even know until after it was cancelled. They were told they could convert all or part of their group life policy to an individual whole life policy and pay the premiums. This could be costly or unaffordable.
3. As you age, premiums for life insurance increase so having a policy in place while you are younger is more affordable. If you are relying on a small policy from your employer and it’s cancelled, as was the case at Sears for retirees, you may not be able to afford to replace it.
4. If you are diagnosed with a serious or life-threatening health condition, it becomes more difficult to obtain coverage because you may be declined coverage, or the benefit amount would be limited and premiums would be based on the risk associated with the condition. While there are guaranteed issued life insurance plans available (plans that cover you if you have a serious condition), they are limited in value, higher premiums are a factor and there are conditions attached.
5. You may lose your job, or you may be forced to work part time. If you do, depending on your health and age at the time as mentioned above, it will affect your ability to obtain other life insurance. If you become a part time employee, you may not qualify for employer paid life insurance.
Some employers offer their employees the opportunity to purchase additional life insurance that is payroll deducted. This is a good option for additional life insurance as it is your policy and rates are usually affordable. Even if you leave employment, it’s still your policy to keep. While it is not a bad idea to take advantage of your employer’s offering, it shouldn’t be your only source of life insurance.
It boils back down to the fact that it is always a great idea to have an additional policy that you are in control of outside of your employment in case any of the above happens.
Contact me to learn more about your options of purchasing a life insurance policy outside of your employment. I will work to find the right policy to meet your needs. Don’t leave your loved ones unprotected with low benefit or risk higher premiums due to unexpected health conditions, aging, job loss or loss of your life insurance benefit due to employer cancellation.