Many employee benefits packages include basic life insurance. If your employee offers this benefit, ask yourself a few questions as you decide if you should buy it or not.
How much coverage is offered?
Typically, employee-sponsored life insurance policies provide benefits that equal one year’s salary. This coverage may be adequate to pay for the funeral and other expenses of a single person with no dependents, but you’ll need more coverage if you have a family, mortgage or debt. Ideally, your life insurance policy benefits should total eight times your annual salary.
Can you keep the policy if you quit or lose your job?
Because your employer-sponsored life insurance policy is part of your benefits package, you may be unable to keep it after you lose your job, switch to part-time status or quit or if your employer goes out of business. Buy an individual policy if you want to guarantee coverage no matter what happens with your job.
Can you afford the premiums?
The life insurance policy your employer offers may be free, but you still want to shop around. Another company may offer better coverage for an affordable lower price.
Is there a medical exam?
Most life insurance policies require medical exams and charge higher premiums to consumers with preexisting medical conditions like diabetes or heart disease or who smoke or are overweight. If your employer’s life insurance coverage does not include a medical exam, sign up for the maximum coverage.
Is the insurance company reputable?
To save money, your employer may choose a life insurance company with a low rating, which means you may not get a payout when you need it. Check the company’s A.M. Best rating to make sure it’s reputable. If not, search elsewhere for reliable coverage.
Purchasing your employer’s group life insurance makes sense in some cases. Do your homework, though, to make sure you’re getting enough coverage at the best rate. If not, purchase an individual policy that gives you and your loved ones peace of mind.
