Well, it is certainly a nice perk of the job. But it often pays more to get additional coverage. Here’s why.
If your employer provided life insurance enough to take care of your family? Are you paying too much for the coverage? Do you know a healthy 50-year old individual can save around 80% on premiums in his first year alone by switching to an individual term life insurance plan rather than an employer-provided plan?
So why should you even go for group life insurance at work? Let’s see.
Pros of group life insurance at work
There are 3 primary benefits: convenience, price, and acceptance.
Convenience is the key to those who need life insurance but have not purchased it yet. A group life insurance through work is the easiest way to protect your family.
Your work life insurance can also offer you excellent rates that you may not beat by shopping around.
Lastly, people with serious medical conditions can easily qualify at much better rates through their work life insurance policy than an individual policy. Medical examination is also not required, although you may have to fill up a detailed questionnaire.
Cons of group life insurance at work
Most people seldom stay with the same employer for their entire career. That brings us to the first con of group life insurance at work. You lose your policy when you leave your job.
You might be able to convert your work life insurance policy into an individual plan when you leave, but the premium would go up significantly.
Secondly, your immediate next job may not offer you group life insurance. In that case, you can go out and opt for an individual life insurance policy, but remember, the cost of life insurance rises with your age. And you never know, you might have developed a medical condition in the meantime that you are not even aware of. This will further raise your premium or even make it impossible for you to get a plan.
Also, when you are choosing to go with your work life insurance plan, you will seldom find the broad range of policy options available with individual plans. For example, term life insurance is the simplest and the best option for young people on a budget. Most work life insurance policies provide this plan.
But what if you need a more complex product, like whole life insurance? Hence, you should always consult an experienced financial advisor before taking the final call.
Finally, you may also not be able to get as much coverage you want through work. If that is the case, you should consider going for a regular term life insurance plan along with your work plan.
How should you decide?
The first thing you should do is to take advantage of any free basic group life insurance plan offered by your employer (if applicable).
Next, you should compare the cost of getting supplemental life insurance through work to an individual policy you can find on your own. You can use a free life insurance quote calculator for this purpose.
If you find a comparable deal on your own, it is not worthwhile to get life insurance through work. Even if an individual policy costs slightly higher, it is still probably a better bet because of the portability it provides.
In case you have substantial life insurance requirements, like many dependents, consider going for an individual plan and supplement the same with your work life insurance policy. And then, if you think you might not qualify for good life insurance rates because of a serious medical condition, group life insurance through work is a really good option.
Get in touch with a life insurance advisor to know the best option for you
At Trust Life & Investments, we have over 30 years of experience providing expert insurance and investment advice for businesses and individuals. Get in touch with our advisors to know the best life insurance options for you in Mississauga and Toronto. No fees, no obligations!