Should I Buy Life Insurance Through Work?

Most people would say “yes” since employers offer basic life insurance as part of their benefits package at a low cost and sometimes it’s free. That sounds fair if you are single and don’t have any children. However, if your death would be a financial burden to your spouse and children, you may need coverage five to eight times your yearly income – experts recommend 10 to 12 times.

The Drawbacks

Getting life insurance through your employer may seem like the best thing to do, but keep in mind it may not be enough. Also, if you were to quit or lose your job, you would lose life insurance coverage. Some people may buy and additional coverage four to six times over and above what their employer offers. Another thing to do is to acquire a supplemental policy from elsewhere.

The Benefits

If you have a pre-existing condition, it may be harder to qualify for a traditional term life insurance.  In such cases, it makes more sense to purchase a life insurance policy through your employer because it may be easier to get approved through them than a provider somewhere else. Other major advantages are convenience and cost. A life policy acquired through your employer is often less costly and at times free. In some cases, you may be able to convert your group policy to an individual one.

How much coverage do you need?

Life insurance should be there to cover your obligations such as medical bills, funeral costs, and the future living expenses of your dependents. A term policy 10 times your annual income should work. So, if you obtain a policy through your employer, you should think about a supplemental policy to an additional larger policy.  Also, if your salary and living expenses increase, your life insurance coverage should increase as well. Nevertheless, if you are done paying your home and your kids are done with college, you can reduce your policy amount.

Choosing a life insurance policy

If you choose to purchase life insurance through your employer or a supplemental insurance policy on top of what’s offered at work, make sure you shop around to get the best rate possible. Remember insurance companies will do a risk assessment when ensuring you. Chances are you will be declined if you have a serious health condition or they may accept you but with a higher premium. Term life provides the most affordable rates with coverage for 10, 20, or 30 years. However, term life insurance has no cash value and beneficiaries only get a payout if you die during that term. You can renew your policy when the term is up sometimes at a higher rate. Another option is to consider converting your term life into a whole policy. Whole life will cover you during your entire lifetime or you can borrow against the amount of your policy. Whole life policies will accrue tax-free dividends or a cash value, but it may be more expensive than a term policy.

There is no excuse for not having life insurance. Speak to one of our agents today and get yourself and your family covered. Choose life.  

Sources
  • https://www.investopedia.com/articles/personal-finance/022014/your-employerprovided-life-insurance-coverage-enough.asp

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