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Is my employer provided life insurance enough?

Many of us are offered benefits at work., one of those benefits at work is employer provided life insurance. This group life insurance can usually be bought at a fantastic rate with most employers. One of the other main advantages of your employer provided life insurance is there is usually no physical to take. This is a HUGE benefit to anyone needing life insurance coverage who has health issues.

Like many estate planning items if you are young and unmarried your group life insurance should be enough. However, if you are young and healthy you might actually be overpaying for your life insurance at work because you have your older coworkers grouped into the premium prices. Often the price of a long-lasting life insurance policy is rather cheap if you are young.

If you are married the next problem could be you can’t get enough life insurance through your employer. Most employer-based life insurance could cap out at 2 or 3 times your salary. At 60,000 a year salary your benefit would be capped at 120,000. This is not enough life insurance to do what you need it to do at a minimum which would be to wipe out your debt (house, car and credit cards). Do you have private student loans, did you know these are not forgiven when you die? Sitting down with an insurance advisor to use a needs-based calculator is a good idea to find out the total amount you might need to ensure your family could be kept comfortable if you were to pass.

Most workplace group life insurance policies have abysmal coverage for a spouse. Most of mine personally were about 25,000 or so of coverage and this is usually the average. Even if a nonworking spouse were to pass the working spouse would need to take time off of work and their PTO, sick and bereavement leave just might be enough to cover it. In the event, you would need to take several months off from work a good spousal policy is important. Many things could cut into your work schedule after this such as the need to do more of the nonworking spouse’s tasks.

Also in this day and age, people change jobs often. Your coverage could change drastically from job to job. Locking in a low rate policy early could help you save a lot. Also if you were to get ill and have to stop working you would lose that coverage when you needed it most. Most employers have short term and long term disability insurance but it is a good idea to have a policy that gives you living benefits also. This can help you wrap up many debt issues that exist before you pass or help you cover the many bills you might have from medical issues.

Another problem with group life insurance is that it usually only term life insurance. There are cases where whole life insurance or universal life insurance might be a more appropriate vehicle for you and your family. You might want to use these types of insurance to borrow from pay off your car or home early or as an alternate vehicle to protect your retirement from taxation.

Are you unsure if your workplace group life insurance is enough? Are you worried about keeping your life insurance as you age or move to another employer who may not have the same benefits? Maybe it is time to look for a longer-lasting term life insurance policy. We can sit down with you to review your work life insurance and your current debt load to see if you might need more. Don’t hesitate to contact us and do a quote with us. We offer a free notarized will for your time.

*This article was written by a licensed insurance advisor.

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