Your employer offers Group Life Insurance? Excellent! Take it.
Anytime your employer offers benefits (health insurance, life insurance, dental insurance, retirement, etc) take a hard look at it. It’s becoming rare that employers offer traditional benefits, so when they do, review them carefully.
In the case of Group Life Insurance, most of the time it is offered at no cost to the employee. Should you want more coverage there is usually an additional premium.
Let’s take a look at the Pros and Cons to Group Life Insurance.
Group Life Insurance: Pros
Here are some advantages of your employer offering life insurance…
Generally when you buy life insurance you have to answer questions about your health, have a blood and urine sample. Simple, yes. Enjoyable, no. Group Life Insurance programs don’t require an exam.
As Long as You’re Employed
With Group Life Insurance, you are insured as long as you work for your employer. Should you take a new job, become terminated, or retire – usually Group Life Insurance ceases too.
Employer generally pays the premium (or most of it).
You may be asked to fill out a paper or two, otherwise the bulk of the work is on your boss and his insurance agent.
Limit of Insurance
The Limit of Insurance…also known as the Death Benefit (or Face Amount)…this is the money your loved one will receive if you pass away.
With most Group Life Insurance policies, you may have a Death Benefit of $25,000, $50,000, maybe $100,000. If you’re able to get this coverage for nothing (or next to nothing), without a doubt, sign up for it. But, is the coverage adequate for your families needs?
READ MORE: How Much Life Insurance Do I Need?
Your Beneficiary is the person or persons you choose to receive the Death Benefit when you pass away. Your life policy may be set up by your boss, but you can choose who your Beneficiary is. For instance, if your Group Life Insurance policy has a Death Benefit of $50,000 and you pass away, your Beneficiary would receive $50,000.
Group Life Insurance: Cons
Can’t Take it With You
If you no longer work for your current place of employment (for any reason), most Group Life policies won’t allow you to keep the policy. This means if you retire or get a new job you no longer have life insurance (unless you have a separate policy separate from work).
Increase Your Coverage
Yes, you can buy more life insurance coverage through your Group Life plan. Let’s say you have a $50,000 life policy through work. Ideally, $200,000 would be the ideal number. You can buy the additional coverage. You will be responsible for the additional premium. An exam may be required as a prerequisite of purchasing additional coverage.
Another thing to keep in mind, buying additional life coverage through your employer’s sponsored plan will usually be more expensive than if you buy it through a life insurance company outside of work. Therefore, if you want/need more coverage do some shopping (or call an independent insurance agent).
Coverage Based on Your Salary
One to two times your salary is the normal Death Benefit offered by most Group Life policies. I don’t want to sound like I’m criticizing Group Life Insurance, because if you are offered it, why not? But rarely is one to two times your salary enough coverage.
Are you single, fresh out of college or are you Married with three kids?
Your season of life will determine your need for life insurance (i.e. who’s at home depending on you?).
Why Do I Need a Life Insurance Policy Outside of Work?
I touched on this above. If you’re 23, single, renting an apartment, life insurance may not be as high on your priority list. However, if you have a significant other and a kid, life insurance should be a conversation in your home.
The reality is, once you have people that depend on you at home…Your paycheck, the tasks that you tend to – add up. We’re not even talking about the emotional toll it would have on your family.
Life Insurance is designed to make your family whole again after a loss, allowing them to enjoy the same quality of life they had while you were in the picture.
Don’t underestimate what your families needs.
Wrapping It Up
To sum it up; if you can get a life policy at no cost from your employer – do it. It’s a no brainer.
I do believe most people need more coverage beyond what their employer offers.
I hope you will take some time to get outside of your comfort zone and determine what coverage your family needs.