I have group life insurance through work. Is it enough?

Employer-sponsored life insurance comes as a well-intentioned perk for loyal employees. Getting covered through work is a less expensive way to protect your family, especially when you need life insurance but haven’t shopped around for one yet. In most cases, you may qualify for this employee benefits package without taking a medical exam.

On the flipside though, group life insurance through work can easily lull you into a false sense of security. It’s important to note that workplace insurance coverage may not stretch as far as you think. It often comes with some serious shortcomings and might not be enough to cater for all of your family’s needs, including childcare, mortgage payments, and other financial responsibilities.

Besides, many employer-provided policies rarely offer enough flexibility, coverage levels, and guarantee for long-term support. This is why it’s highly recommended that you take out your own life insurance cover to supplement your death-in-service benefit package.

In this post, we discuss three reasons you should never depend solely on your workplace life insurance policy.

Policy limits are too low

One of the biggest problems associated with group life insurance is low policy limits. Most small-and-medium-sized companies will typically cap their minimum coverage at 1 to 2 times your annual salary. This may not be enough to support your family and loved ones in the event you pass away and they are left with little or no income.

A lot of financial experts recommend getting life insurance coverage worth at least 10 times your current salary to be on the safe side. The more coverage, the better. If anything, there’s nothing like “too much” life insurance.

This is why you should consider supplementing your group life insurance with your own plan. If you were to pass away, your loved ones will find it easier to stay current with rent or mortgage payments, settle debts, and pay other bills as they figure out a new income stream.

Little or no customisation options

Another reason you should consider getting your own individual life insurance policy is that your employer may not offer a plan that matches your specific lifestyle or needs. Remember, life insurance through work is designed to be general policy for a group of employees. This means you may not have the option to tailor your part of the cover to suit your family size, income, or retirement timeline. 

Rather than rely solely on this kind of arrangement, how about you get a plan that you have more control over and one that aligns with your goals. When you buy your individual life insurance cover, you can choose your coverage levels and timelines to fit your unique needs. For example, you can choose to cover a specific term to guarantee that your children will complete university comfortably even if you passed away earlier.

Lack of portability 

Your group term life insurance isn’t portable. What this means is that it’s tied to employment and you can’t take it with you once your time at the organisation ends. Put otherwise, your cover will only stay in force for as long as you are working for the policyholder.

Should your job situation change, for example by moving from a full-time to a part-time employee or you’re laid off, there’s no other choice than to relinquish the life insurance coverage that came as a result of that job.

And even if circumstances remain the same, there’s still the risk that your employer could cease offering group insurance policies to cut operation costs. In all those cases, you risk being left without insurance coverage with little to help. Solution? To take out a personal life insurance plan that tags along wherever you choose to go.

Conclusion

Employer-sponsored life insurance is without a doubt a great plan and you should enjoy it while it lasts. However, depending on your lifestyle and financial obligations, it may not be big or reliable enough to protect your family in the worst of times. This is why you might want to consider supplementing it with your own policy to guarantee more peace of mind for yourself. Most importantly, you can rest easy knowing that your loved ones have a long-term financial safety net in place in the event you depart.

Does your employer provide you with a group cover? Do you find it enough or are you considering getting a policy of your own? Share your feedback in the comments section below.

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