It is hard to discuss life insurance with people. No one wants to think about, much less talk about, life after death. But, it is critical to be proactive and put the future ahead of your emotions. It may also seem beneficial that your employer offers life insurance through a group plan, but what happens when you no longer work there? You will not have those benefits, and your dependents might be left behind with a financial burden. Employer-provided life insurance has perks, but individual plans can be more beneficial.
A new survey from LIMRA states that 108 million Americans have life insurance through their employer, while 102 million Americans have an individual plan. That is the first time group coverage has been more popular than individual plans. This scenario could exist because most people are uneducated about individual plans and what they can offer. Employer-provided life insurance is not necessarily enough.
If you are young and just graduated from college with no dependents, life insurance is still an option for you. What happens if you pass unexpectedly? Your loans become your family’s responsibility, adding to their stress. Generally, life insurance policies are much cheaper when you are younger, so all the more reason to try to grab a policy.
Perks of Individual Plans:
- Lock in a cheaper rate for a longer period. Specifically, term life insurance is the less-expensive option for life insurance. Term life is set for a limited time and can protect you and your family for 5, 10, 20, or 30 years. However, when the policy ends its term, the insurance protection ceases, and there is no death benefit from the premiums you paid over the years.
- Change jobs as many times as you would like and still have coverage. If you change jobs often, this perk makes sense.
- You have your own contract. Since employer-based insurance is part of a benefits package, your employer can change aspects of the coverage, and you may not like the changes. Your boss may change insurance carrier, the amount of your premium payments, deductibles, plan network, or other options.
- The insurance company cannot cancel your insurance. Only you can. Once again, you have more control over your policy. You will need to be consistent and on time with your payments toward the policy. Some carriers penalize or cancel your plan if you fail to pay during the designated time.
- Buy as much coverage as you think your family will need. For example, you can purchase additional coverage for your spouse and children. You can do so. If you get life insurance for your young children, then down the road, the policies can help pay for their college education.
These are just a few things an individual plan can provide to you. Some can act as investment opportunities, and others can act as a way for you to accrue money for retirement. But, it is vital to list the cons of individual life insurance to decide what is best for you.
Cons of Individual Plans:
- They are more expensive. More money comes out of your wallet when there are no employer subsidies to help you pay premiums.
- It can be difficult to buy at a higher age. Insurance companies believe an older individual will be riskier to insure than a younger one. So, the premium payments might be higher for older people.
- Some underwriting may occur. This assessment can include examining your healthy history, lifestyle, occupation, and hobbies. Higher-risk individuals will likely pay more for coverage. For instance, a high-risk job such as a longshoreman will probably pay more than a school teacher.
The most important takeaway from this article is that life insurance is necessary for everyone. It’s not just about investment opportunities or whether you believe it is a necessary expenditure or not. It’s about ensuring the safety and comfortable living of the people closest to you.
Life Insurance Questions?
We hope that this information on employer-provided life insurance is useful to you.
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This article was updated on 11/14/2024.