Life Highlights
By Joel Zimmerman

Do You Need to Invest in a Life Insurance Policy If Your Employer Provides Coverage?

Often, employers provide basic life insurance coverage to employees. This helps them attract new applicants looking for benefits as well as retain existing employees, but it may not be enough to actually meet each employee’s specific needs. Investing in one or more life insurance types outside of work could actually offer you a lot more security.

Here’s an example to better understand this concept:

Let’s say that you’ve been working at a certain job that offers you adequate coverage, but you no longer enjoy working there and wish to quit. This causes you to remain in a dead-end job only because of the worry that your family will have no support in case you die after leaving it!

The important thing to keep in mind here is that when you leave the job, you can’t take the employer-provided coverage with you. As you get older, the chances of being able to get additional coverage through a personal life insurance policy drop drastically, or premium payments become so high that you’d rather just stay put in a job you hate.

This is just one reason why it makes sense to invest in life insurance on your own, whether your employee provides you with coverage or not. Other than that, here are some other reasons why relying on employer-provided coverage alone is not a good idea:

  • You could lose your job with no warning – In the uncertain economy of today, holding on to a job is almost as difficult as getting one in the first place. Downsizing and lay-offs have become commonplace, and you could be next. If that happens, you no longer have any life insurance coverage to protect your family and your future!
  • You could develop a medical condition – Even while you remain in employment, the possibility of becoming “uninsurable” remains high. If this happens, due to a health condition that affects your insurability, you’re on shaky ground. What happens if you lose your job sometime after and cannot get your own life insurance policy?
  • Work-sponsored coverage could be inadequate – Most employer-sponsored life insurance tends to be on the lower side, so you could be insured only for $50,000-$100,000 when your needs are far higher. If you have a family, loans to pay off or other responsibilities, your coverage probably needs to be $500,000-$1 million!

What Are Your Best Options?

If there is no group insurance coverage (which most employers opt for) at your workplace, it isn’t enough for your needs, or you want financial security regardless of current employment, here are a few things to consider:

Don’t Wait to Buy Insurance – Here’s the most important thing to remember – get personal insurance as soon as you can. The longer you wait, the higher the eventual rates will be, so lock in your rates while you’re still young, healthy and “low-risk”.

Voluntary Payroll Deductions – When employers don’t offer insurance coverage, voluntary employee-paid plans are your best bet. The voluntary plan has plenty of benefits, one of which is the premium is around 10-20% lower, given the automatic payroll deduction, thereby reducing the billing and enrollment procedures.

Third Party Policies – Hold on to your employer-provided life insurance, but invest in an additional private policy for better and more diversified coverage. As with any investment, diversification is key, so you should have multiple plans for different financial needs.

Third Party vs. Buying Directly from Insurance Companies – Consider these reasons for buying insurance through an agent:

  • There are no additional costs, and you can explore a wider range of life insurance types and providers.
  • You can opt for a policy that fulfils your exact needs, often at an affordable price, simply by widening your options.
  • Insurance agents have detailed knowledge of the workings of various companies, and can suggest the best ones.
  • An experienced agent can handle all the paperwork and nitty-gritties on your behalf, cutting down your effort.
  • Not only is the application process hassle-free, but so is changing your coverage or investing in additional insurance when required.

A qualified agent like LifeCentra can help you find the perfect plan and answer any questions you have about various life insurance types, so get in touch for a consultation today!

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