Dealing with life insurance can certainly be a dull and unappealing task, and as far as financial matters are concerned, it might be the least sexy of the lot. However, with many employers now offering life insurance as a benefit, it’s important to know whether or not your company offers enough insurance to cover your family in the wake of your passing.
While life insurance can seem like a straightforward benefit, it is actually important to fully understand your policy and what you are paying for. There are many aspects to life insurance as a company paid benefit and while the main purpose of life insurance may be obvious it is also important to keep these things in mind as well.
Does Your Company Offer Enough Coverage?
For most company life insurance policies, the amount of coverage you can receive is limited. This means that if you do pass away while only having a company policy, it may create a trying situation for your family. Although having some life insurance is better than nothing, it is important to look for additional coverage if you want to create long-lasting financial well-being for your loved ones. Most company policies will only pay one or two times a policy holder’s annual salary, while it is recommended that you have closer to 10-20 years of annual salary in your policy.
Do You Plan To Be With Your Company Long Term?
If you plan on retiring with your current company, a life insurance policy can be a great benefit. However, one of the main issues with company life insurance policies is that they aren’t transferable from job to job, and they also will be cancelled if you are fired, laid off, or quit your job. Unfortunately, they don’t build equity like a 401k or a private whole life insurance policy. Therefore, you may want to evaluate your goals with your current company before deciding to depend on a company-offered policy
Are You In Good Health?
Much like company supplied health insurance, your company life insurance policy is not based on your individual health but on the rate that is provided for your company. While this may be beneficial if you are in poor health or a more senior member of the work force, it is often a hindrance to young healthy employees. If you are young and in good health it may be worth purchasing a private policy so you can have low premiums for the duration of your policy.
Can You Afford to Lose Your Life Insurance?
It’s important to research the life insurance company that your company chooses, as it’s essential that the insurance company is able to handle a claim if there is a death. Some companies will go with a lower rated insurance company in order to save money, which can leave a policyholder high and dry. Also, companies that offer life insurance aren’t legally obligated to continue that coverage throughout the duration of an employee’s career, meaning it can be there one day and gone the next. In a highly volatile economic climate, it’s important to keep these elements in mind when deciding on whether or not a private policy is right for you and your family.
About The Author:
Richard Reich has 20+ years of experience as an independent life and disability insurance broker. He has personally assisted thousands of clients with their disability and life insurance needs. For more information, please visit www.lifeinsure.com or www.instantquotelifeinsurance.com.
