Your company’s group life insurance plan does have a few advantages. You can usually enroll for free or close to free — which is a lot cheaper than you’ll find on your own — and sometimes you can buy more at a discount. Group plans are also easy to qualify for. They won’t scrutinize your health with a medical exam. This is a big deal if you have a pre-existing condition, which often leads to high premiums or being uninsurable. The process won’t require a lot of effort, so there’s no reason not to sign up — especially if it’s free. This doesn’t mean your family is protected, though.
Signing the dotted line of your company’s policy may offer a sense of relief. A little coverage is better than nothing, but your family is far from fully covered. Given the option, many choose to opt in. The problem is many people don’t revisit their choices. And worse, almost half of workers won’t update their life insurance coverage. If this sounds familiar, you may be taking an unnecessary risk.
Typically the biggest concern with your company’s life insurance plan is insufficient coverage. Most plans offer one to three times your salary. If you earn $45,000 per year, you could see up to $135,000 in coverage. The reality is, only a fraction of workers have more than $100,000. It seems like a lot until you realize how much you actually need. A basic needs calculator can do the math for you. The number may include paying off debt like your mortgage, covering childcare expenses, your kids’ education, or your family’s entire cost of living if your spouse doesn’t work.
Another potential downside of your employer’s plan is portability. When your job ends, usually your life insurance coverage does too. Unless you’re staying forever or your position is 100 percent safe, parting with your plan is inevitable. Staying enrolled may be possible when you leave, but it won’t be free.
Your first glimpse of life insurance may have been with your company’s HR department. Or a form you scribbled through during open enrollment. It’s possible you signed up and haven’t looked back. If you’re ready to revisit your family’s needs, you’re one step ahead of most. You can start the conversation with a financial advisor or insurance broker. From there you can calculate your family’s gap in coverage. Employer-provided life insurance is a good thing, but you can’t afford to overlook your family’s complete coverage.
If you’re interested in learning more about life insurance with Ethos, you can get started by filling out a few questions to get a quote.