Posted On: June 5, 2017
I Already Have Life Insurance Through My Job…Why Do I Need Another Policy?
If you are lucky enough to have a job with benefits that include employer-sponsored group life insurance, you're pretty lucky. Taking advantage of group term life insurance rates can be a great way to supplement your other personal life insurance coverage, helping make sure your loved ones are protected in the event of your premature death.
However, thinking that because you have employer-sponsored coverage you don't need a separate, stand-alone policy can be a costly, and unfortunate, mistake. Here's why:
1. Employer coverage is usually not portable. In most cases, employees who leave their employers are not able to take their employer-sponsored life insurance coverage with them - this is referred to as portability. So, when your employment ends, your policy ends. If you still have a need for life insurance coverage at that point, you will need to be able to qualify for a new policy based on your health at that time, and will need to pay premiums based on your then-attained age. Because our future health is always a big unknown, you may find yourself in a situation where you are unable to obtain the coverage you, and your family, need.
2. Conversion, if available, will be costly . Although it is rare, sometimes those group policies can be converted to universal life policies that you would manage and own. However, remember that the cost of insurance is based on your age at the time of policy issue. In the case of a term-to-universal conversion, the policy actually starts when you convert it. While you may not have to worry about being able to qualify for that coverage, your premiums will likely give you some sticker shock and maintaining the policy over the long-term may be unattainable.
3. Potentially insufficient coverage . Another problem with relying solely on your employer-sponsored benefits to meet your life insurance coverage needs is that the amount of insurance coverage you are able to purchase may not be enough to meet your needs. Death benefits of one-to-two times your annual salary may seem sufficient when you're just getting started in your career. However, for employees with spouses who don't work outside the home, with significant mortgage or other debt, or those who have dependents with special needs, the need for insurance protection is likely to be greater than what you are able to buy through payroll deductions.
4. Employer-sponsored coverage may not be the cheapest . While the premium amount you're quoted for an employer-sponsored plan may seem attractive, you may actually be able to get a better deal when you shop for coverage on your own. And of course, when you do that, you - not your employer- have control of the policy.
Everyone has different life insurance needs. However, generally speaking, you should not rely entirely on life insurance benefits obtained through your employer. Group life insurance can be a great way to supplement your individual life insurance coverage - talk to your insurance professional about how you can best take advantage of that employee benefit while still making sure you are protecting your loved ones.
At Symmetry Financial Group, we are passionate about helping people identify and insure against risk. We have access to more than 30 well-known life insurance carriers, so we can find you options designed to meet your needs - and your budget. To learn more or to request quotes, contact us online or call us at (877) 285-5402 today.