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Is Your Employer Life Insurance Really Enough?

on 7 Oct, 2018

Almost 9 out of every 1000 people living in the country of Canada will pass away today. That death toll includes those who die from natural circumstances as well as those who pass away from accidents or other unforeseen circumstances.

Imagine, you or your partner passing away unexpectedly…

How would your household continue to uphold its way of life? How would it afford the necessities that your family has come to rely on?

For many Canadians, the obvious and correct answer to those hard to consider questions is life insurance.

A quality life insurance policy can protect you and your loved ones from expenses that result from one’s passing. But are you really covered by just opting into the employer life insurance plan your job offers?

Below is a comprehensive list of things you need to consider before feeling comfortable on your employer’s plan.

What Are You Needs and Does Your Employer Meet Them?

The first step to understanding whether or not your employer life insurance plan is enough to support your family’s needs is to assess what those needs are.

Your employer’s plan should spell out the total amount your life insurance plan covers you for in your benefits package. Is that number enough for your family to press on if you were to pass away?

Consider this, the Canadian funeral industry does about 1.6 billion dollars a year in revenue. Those revenues come from skyrocketing costs surrounding everything from basic cremation to extraordinarily expensive ceremonies.

Think about that cost and add to it the amount of money your family would need to preserve its way of life long enough for your partner to get back on his/her feet. Does your employer life insurance plan provide the coverage you need?

For most, the answer is no.

While many employers look to subsidize their benefits package by offering basic life insurance, most policies will fall well short of what families are recommended to carry.

Ask yourself, “How much money would my family need to pay for my funeral expenses, settle my debts, and replace my salary for 5-10 years”.

The figure you come up with is the minimum of what you should be covered for.

What Happens If Your Work Situation Were to Change?

As with all insurance provided through an employer, once you leave your job your insurance leaves you. The last thing you want is to have a gap in your coverage since you never know when adversity will strike.

Consider this, the average person will carry 12 – 15 jobs in their career. Given that most careers span 50 years or so, that’s a lot of opportunity for your life insurance coverage to fall through the cracks.

Therein lies one of the main reasons why people subsidize or replace their employer life insurance with a third party plan.

Jobs are temporary but your need for insurance is constant.

What If Your Health Takes a Turn?

Life insurance is meant to protect you when your health takes a turn for the worst. After all, that’s when you need it the most.

With that, we find another major issue with employer life insurance policies.

Imagine this scenario:

You’ve worked for a company for 10 years. The whole time you’ve been in their employ, you’ve carried their life insurance policy.

Suddenly, your health takes a turn leaving you incapable of working.

You need to leave your job and focus on your recovery.

Your life insurance, just when your family needs it the most, is now no longer supporting you.

The moment you leave your job, most life insurance policies will stop covering you. That means if you passed away via a slow illness and had to quit your job between when your health declined and when you passed away, you’d have no coverage.

Even if your health declines but doesn’t get bad enough to make it so you need to quit your job, you being on your employer’s plan at very least will ruin your ability to be willfully employed.

Why?

Because when your health declines, if you were to quit your job for an unrelated reason, lose your insurance, get a new job and then opt into that company’s insurance plan, your new insurance premium would be astronomical given your poor health.

Bottom line… In order to maintain your current insurance rate when your health worsens, you’ll get forced to stay put with your current employer.

Is Your Employer Plan Your Most Cost-Effective Option?

Despite the many reasons why solely relying on an employer life insurance policy is a bad idea, many people continue to do so. Reasons for that vary but usually they come down to convenience and cost.

If convenience is your reason for not weighing your insurance options, know that as inconvenient as it is to shop for insurance, it would be more inconvenient for your family to get left with nothing in the result of your untimely death.

On the subject of cost, many are shocked to find out that their employer plans may actually cost more than a plan they could get in from the private insurance market.

Remember, your employer has a pre-existing relationship with a single life insurance provider. That provider is the only one offering you products through your work benefits package.

Since you don’t have the opportunity through work to shop around for different products, your employer’s insurance provider could charge anything they want.

To make sure you’re not getting overcharged for cut-rate insurance, it’s important that you take the time to compare private insurance products. There’s no downside to understanding what your options are.

Understand The Cost of Waiting

We lead busy lives. To that end, even with all of the information we’ve presented on why it’s important that Canadians do their diligence and weigh their life insurance options, most won’t. At least not right away.

Unfortunately, procrastinating your life insurance affairs can be a costly proposition.

Every day that goes by you’re getting older. Given that age is a key factor, insurance providers weigh in discerning the risk involved with insuring you. The older you get, the more your premiums may be.

Every day that goes by, you run the risk of getting ill. The second you have a pre-existing condition insurers deem “too risky”, you may undermine your ability to get a quality, low-cost life insurance policy altogether.

Your life insurance quote will never be lower than it is at this moment. For that reason, you want to make finding the best policy a priority in your life.

Finding a Quality Life Insurance Policy to Subsidize or Replace Your Employer’s Plan Can Be Simple

If you’ve looked at our considerations above and have come to the conclusion that your family isn’t safe under your current employer life insurance plan, you may be wondering what to do next. After all, the open market for life insurance offers a lot of options.

The prospect of sorting through plans, comparing them, and picking the best one may seem overwhelming.

Fortunately, the tools we offer at Insurdinary make things easy. We host a robust database of all of the best life insurance policies available to Canadian citizens.

Armed with our search tools, you can find and compare the best rates for all of your insurance needs with the click of a few buttons.

Remember, no amount of leg-work is too much when it comes to securing your family’s future. Still, at Insurdinary, we strive to make protecting the people you care about simple.

Wrapping Up Understanding If Your Employer Life Insurance Policy Is Enough

In a study conducted by Ipsos-Reid, it was concluded that as many as 70% of Canadians carried life insurance coverage. Many of those Canadians, however, have their insurance solely through their employer life insurance policy.

If you’re among that group, we recommend that you take to heart the considerations we’ve outlined above and ask yourself, “is my employer policy really enough?”

If you’re like most people, you’ll find that the caveats that come with employer life insurance make it so it’s an absolute necessity to subsidize or replace your plan with a product from a 3rd party provider.

Don’t leave your family’s ability to endure your loss to chance.

Be proactive and use the insurance shopping tools on Insurdinary to find the perfect, low-cost life insurance policy you need today!

If you’re looking for more information on what to look for in a quality life insurance plan, feel free to browse more of our blog’s content. You’re also welcome to contact our insurance specialists with any questions you may have!

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