If you receive employee benefits at work, there’s a good chance you have life insurance coverage as part of your benefits package. Although it’s valuable for you and your family, the coverage from your employer’s life insurance policy might not be as much as you need.
That’s why it’s important to understand the pros and cons of employer life insurance options and know ways to supplement your employer life insurance coverage.
"It offers only a fraction of what you actually need."
Employer life insurance is also known as group life insurance. Here’s how it typically works:
Your employer pays your life insurance premiums for a stated amount of coverage. If you want more coverage than the limited amount that your employer provides, you may have the option to increase your coverage for a higher monthly premium, with the amount deducted from your paycheck.
An advantage of group life insurance is that you can’t be refused coverage for any reason — you’re approved as long as you’re an employee.
Since the plan costs little or nothing for you, enrolling in it makes good sense. So why look at more options?
The answer is simple. Employer life insurance offers only a fraction of what your family could actually need, and it provides coverage only while you are an employee. If you leave or lose your job, you could lose your life insurance coverage and have no protection which is why you should have an individual life insurance policy outside of your employer.
"A good rule of thumb is to have 5 to 10 times your salary in life insurance coverage."
Supplemental life insurance is a type of coverage that can be purchased in addition to your whole or term life insurance plans. Many companies offer supplemental coverage to their employees as an add-on to their group life insurance policies. This type of insurance may cover burial costs or accidental death and dismemberment. If your company offers supplemental life insurance, it's a simple, convenient way to increase your coverage at a low cost. But you may find these policies to be too limiting in what they cover, so you might prefer to shop around for a policy on your own.
Getting an individual term life insurance policy to supplement your employer’s life insurance can make a lot of financial sense. The big question is: how much additional coverage do you need?
To help determine the right coverage amount, consider that employer life insurance typically offers coverage of 1 to 2 times the person’s annual salary. That may seem like a lot of money. However, you have to consider how much your family may need for living expenses if you’re no longer here — costs such as food, rent or mortgage, transportation, utilities, education, and medical, as well as credit card debt and the loss of your income. A good rule of thumb is to have 5 to 10 times your salary in life insurance coverage.
In other words, if your employer life insurance covers twice your annual salary, then consider buying term life coverage that’s at least three times your current salary to make up the difference. Generally speaking, more coverage is better.
Also, you may not stay at your current job forever. If you were to leave for any reason, you’d likely have to surrender your workplace life insurance policy. And if you develop a medical condition even while you’re working, you might find it difficult to buy additional or replacement life insurance on your own, running the risk of being turned down.
Buying additional life insurance now while you’re healthy is a reliable way to help protect you and your family financially during the years ahead.
Term life insurance can be ideal as additional insurance but it’s also valuable on its own, especially if you don’t have any type of coverage.
Gerber Life Term Life Insurance coverage is easy to get. The application is quick and simple, no medical exam is necessary in most cases and coverage is dependent on answers to health questions.
Having the right kind of financial security cushions in place can help prevent unnecessary strain for your family should something happen to you. Employer life insurance is a start. Now, calculate your family’s living expenses and your final expenses to help determine how much money and for how long your family might need life insurance as financial support.
To find out how much a Gerber Life Term Life insurance policy would cost and other specifics, call us toll-free at 1‑800-503-4480. Our life insurance specialists are here to help.
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