Should You Rely on Employer Life Insurance?



If you can secure life insurance through your employer, you should.  Everyone qualifies, so no medical exams are required, and it’s administratively easy.  Plus, many employer insurance plans are subsidized– or even fully funded–by the company.

But having life insurance through your employer, does not necessarily mean you are adequately covered.  Workplace policies are typically cover $100,000 or less, so relying on this coverage alone could leave you drastically uninsured.  Most people need five to ten times their annual income in life insurance, and potentially more if they have kids and financial obligations like student debt and mortgages.

Review your employer-provided policy with the following in mind:

  • Your options are limited. Most workplace term life insurance plans only cover a small amount of lost income in the event of an employee’s death—often a year or two of lost salary.  Options to buy additional coverage are often limited to a maximum of a few times your salary.
  • Your employer can decide to change or end your coverage – without your consent.
  • An employer-provided policy is often job-dependent. If you leave your job, you will probably lose your coverage or be offered a more expensive policy at your own expense.
  • If you leave your job for health-related reasons, you may have difficulty getting new coverage—and find it more expensive to obtain, especially if you are older and less healthy.
  • Even if you don’t leave your job, your coverage may end when you retire or reach a specific age. This could mean losing your insurance when you need it the most.

 

Workplace life insurance is a valuable benefit, but you shouldn’t rely on it as your only form of coverage.  A life insurance policy that you personally own can be tailored to meet your specific needs and circumstances. Most importantly, your policy is yours to keep, regardless of your employer or employment status.

Group life insurance through the Alumni Insurance Program is a convenient and affordable way to supplement your group coverage with an individual plan that will ensure your family’s expenses are covered should they ever need it.