06 Mar 2017 Is Your Employer’s Group Life Insurance Enough?
One of the first things I often hear when I bring up life insurance with a client is “I don’t need a separate policy, I have life insurance coverage at work.” As an employer, group life insurance is a great benefit to add to your employee compensation package. But for employees, while having this benefit is a good thing, it is highly unlikely that this coverage is sufficient for one’s overall life insurance needs.
There are certainly benefits to having group life insurance through your employer. It is typically inexpensive, and it provides at least some coverage if no other policies are in place. However, there are many reasons that employer group life insurance coverage should not be relied on as your only source of coverage:
- The death benefit is typically quite small, sometimes 1-2 times salary, but often much less.
- Even if the death benefit is a high multiple of your salary (say 2 times your salary), it is often capped at a certain maximum. So for highly compensated individuals, your benefit is likely lower than you think.
- The coverage is not portable, meaning it usually cannot be taken with you upon leaving employment. If your next employer does not offer group life insurance and you do not have an individual policy, you may find yourself suddenly left with no coverage.
- There is no guarantee that an employer will continue to offer group life insurance. If a company decides to stop offering this benefit, this would again create an issue for someone with no individual coverage.
For all of these reasons, those with a need for life insurance (which is pretty much everyone) should consider an individual life insurance policy. Term life insurance rates have decreased significantly in recent years. Give us a call, and allow us to help protect what is most important to you.