Your employer is offering you life insurance? That is great! But…
Many employers offer life insurance as a benefit to employees. The type of life insurance, amount of coverage, and cost to the employee vary from business to business but for the most part, employer-provided life insurance is a great benefit. It can be cheaper than the cost of purchasing your own policy due to employer group rates and in some cases, employers will cover some or all of the premium costs. Employer-provided life insurance also helps to cover any end-of-life expenses and you are automatically approved upon hiring. But is it enough?
Employer-provided life insurance is great, but it does have some downfalls that you should be aware of. You cannot usually take an employer-provided life insurance policy with you if you leave the company, that is without paying more for it. Taking the policy with you requires them to convert your group policy into a permanent policy and these are typically more expensive. In addition, your employer-provided life insurance may not enough coverage for all of your individual needs. So, what can you do?
This is where individual life insurance comes in.
Individual life insurance is an insurance policy that you purchase separate and unrelated to your employer. It can be customized to your unique needs and because it is not through your employer, you never have to worry about losing it if you leave your job. There are various types of individual life insurance available:
- Term Life Insurance. This type of coverage is typically sold in lengths up to 30 years and coverage amounts vary but can go into the millions. Term life is considered one of the most affordable and accessible life insurance options.
- Term Life Insurance: Return of Premium. This type of coverage is very similar to term life with one big exception… You get the money you pay back at the end of the term if you have not passed away. This sort of guarantee is nice as it gives you financial flexibility, later on, to transition into a permanent life insurance solution.
- Universal Life Insurance. This type of coverage offers guaranteed death benefits and premiums that will not change as long as you pay your premiums on time. Typically, you can choose at which age you want your death benefit guaranteed, for example, 95 or 100. Universal life usually does not hold a cash value and therefore is less expensive than other permanent life insurance solutions.
- Whole Life Insurance. This type of coverage will last until your passing as long as you pay the premiums. Typically, your premiums will stay the same, you get a guaranteed rate of return on the policy’s cash value, and the death benefit does not change. This policy is often more expensive than other policies.
So, which should you choose?
When it comes to individual life insurance vs employer-provided life insurance, it’s not really an either/or situation. Individual life insurance can be the most secure and help ensure that your loved ones are covered. Your employer-provided life insurance can be a nice bonus to that. Should you pass while still holding that coverage, it allows a little extra coverage, but you should not rely on it.
For the best advice for your individual needs and to explore your individual life insurance options, give us a call at 844-GANNONS to speak with one of our licensed agents today.