Why Life Insurance From Your Employer Usually Isn’t Enough

Why Life Insurance From Your Employer Usually Isn’t Enough

While having life insurance through your employer is a great perk that can provide you and your loved ones with peace of mind in case the worst happens, the real question to be asked here is, “is it enough coverage?”

If you’re one of those who enjoy the perks of life insurance through their employer, you can be rest assured that at least, you have some coverage. Which is fine, having some coverage is better than no coverage at all.

What is important to note is, if you have life insurance through work, it is most likely through group life insurance and while it provides decent coverage, it usually isn’t enough to cover your family’s needs.

The following reasons explain why you should get a personal life insurance policy even though you may already be covered by your employer.

 

You don’t own the Policy

When coverage is offered by your employer, you don’t own it. Group life insurance is a type of insurance that ends when your employment ends. If, for instance, you decide to change jobs or lose your job, there isn’t a guarantee that you’ll be offered the same coverage by your next employer. Your entitlement to that policy ceases once you’re no longer an employee of the organisation.

It is usually not enough coverage

The right amount of coverage differs for everyone. There’s a rule of thumb that says you need to have seven to ten times your annual salary in order to have adequate cover. Your employer’s insurance might not be enough to cover huge expenses like a mortgage, or outstanding debt, let alone cover the living expenses of your loved ones if the worst were to happen to you.

When you have an individual life insurance policy, you’re able to decide what suits you best based on your financial needs and capacity.

No access to extra benefits or cash value

While the life insurance you have through your employer is usually affordable and reliable, it is mostly basic, meaning, it doesn’t have added benefits like cash value or other living benefits. Its main purpose is to cover worst-case scenarios and that’s all.

With an individual life policy, you stand the benefit of building up cash value which can come in handy when you need to take out a loan. These options aren’t available with employee offered life insurance.

These few reasons should give you a rethink and make the wise decision not to solely rely on your employer’s life insurance as a major plan for your loved ones. You should rather see it as a supplementary policy to your own individual life policy. Also, remember, you can’t take your employer’s life insurance policy with you, but when you have your personal individual policy, you don’t have to worry about losing it. Having your own individual life policy puts you in charge of the decision-making process and lets you choose the amount of coverage that is right for your family.