Many companies offer their employees life insurance. These policies may be covered by the employer in full and usually give you to option to purchase additional coverage without the need for a medical exam.
Many people opt to rely strictly on these employer-provided policies. In this post we’ll explore the factors that determine whether this coverage is enough.
Coverage to match your lifestyle
If you are single and without much debt, your employer-provided policy may be sufficient as you may only need to consider burial expenses. However, for those with debt, especially co-signed loans, employer-provided life insurance policies may not provide enough coverage to pay off the debt and cover necessary expenses.
Those who are married and/or have children, will want a coverage level high enough to cover burial, debt and your yearly salary for several years. In most cases, it is recommended, to cover at least four years of your salary. Also consider income beyond your salary, such as bonuses and commissions, that you may want to replace with insurance payouts.
If a member of your household has special needs, you will want to increase the coverage level even further. The more you need to cover, the less likely it is that your employer-provided policy will be enough.
Gaps between jobs
Whether you leave your job of your own volition or are let go, your life insurance coverage will likely end as well. Even if you head directly to a new employer that also offers coverage, it will take some time for the policy to come into effect, leaving you and your family temporarily unprotected.
Health issues
If your health leads to you leaving your job, you will lose that life insurance coverage and find it more challenging to secure another policy.
Spousal coverage
Many employer-provided policies give you the option to add limited coverage for your spouse. Once again, you need to take into account existing debt as well as children and dependents when calculating how much coverage you will need.
If there are loans and credit cards to be paid off and it will necessary to hire help at home, employer-coverage may fall short of your needs.
The takeaway
In the majority of cases, additional life insurance coverage will be required to cover necessary expenses in the event of your death. As employment becomes more fluid and unpredictable, it is nearly always advisable to take out an independent policy even if you are happy with the coverage and cost of your employer-provided policy. To learn more about your options, speak with an experienced insurance broker.
Leave a Reply