Is Your Employer's Group Life Insurance Enough?

Posted on February 6, 2018

Group life insurance usually has several benefits like easy acceptance and low prices. But is it really enough for you? Read on to learn more about this policy.

Since about 55% of people receiving their insurance through an employer, the convenience and low-price of group plans are clearly favorable. However, not every insurance policy is created equal. Your employer's group life insurance policy might not fit your needs.

Having your own policy gives you more control over your options. You might have to first ensure that you have the budget for this option. Talk with your spouse \or partner before you make any major decisions.

If you and your family are having a hard time deciding whether or not to buy a policy separate from your group life insurance policy, be sure you have the facts.

10 tips to consider before relying to Employer's Group Life Insurance

Here are the 10 tips you should take into consideration when thinking about whether your employer's policy is adequate.

  1. Think About Your Age

You're never too young to start paying into life insurance. Starting when you're younger can allow you to pay for a lower policy for when you or your family will need it later on.

Even if you don't have a family, home payment, or major obligations yet, preparing financially will make taking them on much easier. If you lock into a rate when you're young and healthy, you could be paying less than many people do later in life.

  1. Rome Wasn't Built In A Day

If something happens to you, there's no way to raise funds for your family the day after. A fundraiser will be nice but it won't be able to come anywhere near a steadily built up life insurance account.

As your family grieves and deals with your passing, they shouldn't be stressed out. The legacy you leave behind should be uplifting to your family, not another burden to be concerned about.

  1. You Get One Shot

Having a life insurance policy is like having a fire extinguisher. You don't get to deal with a fire a second time. Once the worst happens to your family, they have to face it then and there.

Be sure that you're prepared. If your group life insurance policy isn't going to cover a family your size at the standard of living they appreciate, you should consider a supplemental plan.

  1. Value Everyone

Covering everyone is an essential. If you've got a stay-at-home spouse, they could prove to be providing a high amount of value to your home once they're no longer there.

While you might never have sat down and calculated how much it would cost to take care of the things they do for your family, it could be astronomical. If your stay-at-home spouse takes care of cooking, laundry, and home maintenance, you're saving money on eating out, plumbing, and cleaning.

These things can add up very quickly if something happens and your employer's insurance policy might not cut it.

  1. Compromised Assets

If your company is small, your group life insurance plan might not be able to cover your family while all of your assets are being transferred to your spouse or children. You might have failed to sign a certain form and your partner might be left without the inheritance you meant for them.

There's no point in leaving it up to chance. A supplemental life insurance policy can cover all of those lulls and for any potential failures in your assets to pay out.

  1. More Tax-Free Cash

Having a permanent life insurance plan offers lots of benefits. Having a separate account from your employer-based plan will give your family access to cash without having to pay taxes. Any value created in the policy could be used by your family when you need it.

You'll still be leaving that tax-free payout when they need the full plan. In the interim, you'll all be able to have access to money when you need it for emergencies.

  1. You Can't Control Your Employer

Your company could change hands tomorrow and you might have no control over it. Insurance could be in limbo or the whole system could be changed without you having a say in it.

Having supplemental insurance allows you and your family to have a backup plan. Who knows what the future could bring? Make sure you have an umbrella for the rainy days.

  1. There's No Such Thing As Too Much

There are instances where you could be over-insured. If you've got an astronomical earthquake or natural disaster insurance plan for your home in a place that hasn't seen a natural disaster, you could be over-insured. When it comes to planning for your family's future, there's no such thing.

You're better off having a higher pay off that can be used for college funds and mortgage payments than to leave your family struggling. Take it one step further and start plans for your kids as well.

  1. Build Wealth Between Jobs

If you find yourself working in an unpredictable field, you might not be on any particular group life insurance policy for very long. If you're forced to take contracted work, like 40% of the workforce, you won't be contributing to an employer's life insurance during that time.

Having your own plan that continues to grow no matter what could be a lifeline for your family.

  1. Get It When You Can Afford It

After you have kids and start paying for a house, you'll have obligations that could lower the amount of money you can contribute to life insurance. Getting a separate supplemental plan now will allow you to start building another channel so you won't have to contribute so much when your family grows.

Group Life Insurance Plans Fill In Gaps

As the workforce changes drastically, it gets harder to be able to predict what services employers can provide and for how long. A group plan might sound good now but if you aren't habitually adding to another separate plan during those off periods, it could be hard to make up for it later.

If you're ready to start exploring your options for supplemental life insurance, contact us today.

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