Why Employer-Provided Life Insurance Isn't Enough
Having employer-provided life insurance—also known as group life insurance coverage—is a desirable benefit, but it may not always be the best option or enough for the big picture. Consider why group life insurance may be a good route for you or whether you should consider a personal life insurance policy:
What is Group Life Insurance Coverage?
So, what makes group life insurance different from personal life insurance? Simply put, group life insurance coverage is a type of life insurance that provides a policy to a group of individuals. Group policies cover a group of people under a single policy, often with simplified underwriting, and the coverage is typically tied to employment or membership. Personal life insurance, on the other hand, covers an individual and their beneficiaries, involves individual underwriting, and is usually portable even if the policyholder changes jobs or leaves an organization.
Employer-provided group life insurance typically covers not just the employee but also their eligible dependents, such as their spouse and children. The specific details of who is covered may vary depending on the employer's insurance plan. In most cases, the employee has the option to include their family members in the coverage, usually by paying an additional premium.
The coverage for family members may differ from that of the employee, and the specific terms and conditions of coverage should be reviewed to understand the extent of benefits. As long as the employee remains employed and meets the eligibility criteria, the coverage typically remains in effect. However, coverage may end if the employee leaves the company or fails to meet the eligibility requirements. Employees should carefully review their employer's insurance plan documentation to fully understand who is covered, how coverage differs, and the duration of coverage.
Benefits Of Group Life Insurance Coverage
Group life insurance offers several advantages that make it an appealing option for individuals seeking coverage:
Cost: Since this type of coverage is provided to a large number of people under a single policy, the premium costs are generally lower compared to individual life insurance policies. This makes group life insurance an affordable option for employees or members of an organization, allowing them to obtain valuable life insurance coverage at a reasonable cost.
Convenience: Group life insurance coverage is typically provided as part of an employee benefits package or through membership in an organization, meaning individuals won’t have to undergo the hassle of searching for and purchasing an individual policy. The enrollment process is usually streamlined and simplified, with the employer or organization handling the administrative aspects.
Guaranteed Coverage: Unlike individual life insurance policies, group plans typically don’t require individuals to provide detailed health information. This means that anyone with pre-existing medical conditions or high-risk occupations can still obtain coverage. Group life insurance guarantees that individuals are covered regardless of their health status, making it an inclusive option for a diverse group of people.
Reasons Why You Should Consider a Personal Life Insurance Policy
Personal insurance is usually cost effective. Employer life insurance plans base premiums on the age and health of everyone insured at the company. Farm Bureau Insurance of Tennessee bases your rate on you as an individual, which would save you money if you're in good health.
A guaranteed convertibility period. Usually until the age of 65, the owner of a personal term policy may convert it to a permanent policy without needing evidence of insurability, subject to the terms of the policy. This means you can turn a term policy—which is temporary coverage—into permanent coverage that will last your entire life.
An Accelerated Death Benefit Rider. Accelerated benefits, also known as "living benefits," are the proceeds of life insurance policies that are paid to the policy owner if he or she becomes terminally ill, subject to the provisions of the Rider. Unfortunately, those who are terminally ill often lack resources to afford their medical expenses, and this benefit is designed to help meet those needs.
A choice of temporary or permanent life insurance coverage. A personal life insurance program can be tailored to fit your exact needs with a range of customizable policy and benefit options.
Employee plans are often not enough. We commonly see that the coverage provided by an employer is often not enough to cover needs such as mortgage debt (the average cost in the U.S. is $110,000), student debt, childcare, or future college costs for your dependents.
A personal insurance policy is something you own. One of the main benefits of having your own personal insurance policy is that you control it, and it will be there whether you remain with your current employer or not. Most life insurance options through an employer only last as long as you are employed by that company, and your next employer may not offer life insurance. Not to mention, the cost of life insurance rises as you age, and you never know when you might develop a medical condition that could seriously raise your rates or even make it impossible to get coverage when you need it.
Personal insurance has a few other benefits which include:
Remember: there is no excuse for not having life insurance if you have others who depend on you.
Talk with your Farm Bureau Insurance agent about a personal life insurance program designed for you and your family's specific needs.
