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Is Life Insurance Through Work Enough?

Beyond salary or wage, your benefits package stands as one of the great perks of employment. Included in that benefits package, you may find group life insurance.
For the first time since 1960, more people are enrolled in group life insurance plans than those with individual coverage. Group life insurance is a great low-cost or free benefit for employees. But does life insurance through work offer enough coverage for your circumstances?
For many, life insurance through work would not adequately protect their families.
According to Life Happens, many group life insurance plans cover one to two times your salary. In some cases, it covers a set amount such as $25,000 or $50,000.
That sounds like a large dollar figure, right? However, when you start to break down how you would want those funds used, you may find the amount lacking.

How Much Life Insurance Do You Need?

People commonly use life insurance to:

  • Pay off their mortgage
  • Cover living expenses
  • Send children to college

Say your life insurance policy through work provides two times your salary. Your family currently uses your full salary each month on ordinary expenses. Should you pass, your work policy would only provide two years of support for your loved ones. It also wouldn’t cover paying off a mortgage or sending your children to college.
That’s why experts recommend getting coverage worth 10 to 12 times your annual salary. Several factors help determine the amount of life insurance you need. Do you:

  • Hold a large mortgage?
  • Have lots of debt?
  • Support a big family?
  • Have a non-working or low-salaried spouse?

If so, you may want to take out a larger insurance policy. Insurance calculators can help you determine just how much life insurance you need.
Beyond coverage amounts, there are other pitfalls to carrying only employer-provided life insurance.

Pitfalls of Group Life Insurance

If you lose your job or leave your job, you could also lose your life insurance. Few group life insurance policies are portable. So, if you suddenly find yourself without a job, you may be leaving yourself vulnerable. Securing a new job doesn’t automatically mean a new policy, either. According to LIMRA, a life insurance research organization, only 48 percent of companies offered group life insurance in 2017. Your new employer may not offer group life as part of your benefits package.
Other considerations:

  • If you leave your employer because of a medical issue, it may be harder to find a policy at an ideal price point.
  • Your employer could decide to drop the life insurance coverage, leaving you without a policy.
  • Your group life insurance policy may not cover your spouse adequately. An important consideration even if you are the primary breadwinner.

Your work policy is a good way to supplement an individual life insurance policy written specifically for your needs. Take advantage of group life insurance provided through your employer. Then, buy an individual policy and have peace of mind in knowing that you own the policy. You have the coverage no matter your job situation. And, you’ll be able to protect your family in the event of the unimaginable.
When you’re ready for life insurance, working with an insurance sales agency, like us at SelectQuote, can help you get the coverage you need at the best price. We do the hard work for you by providing unbiased comparisons from the highly rated insurance companies we represent. We’re here to help and get you the peace of mind you need for you and your family.
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