Problems With Employer-Provided Life Insurance and Why It’s Not Enough
One thing we hear a lot when asking about life insurance is “I don’t need life insurance. I have coverage through work.” While it may be convenient to sign up for something that has no out-of-pocket cost or very little coming out of your bi-weekly paycheck, employer-provided life insurance coverage may not be enough to protect you and your family.
Consider the following drawbacks:
- Coverage is only 1-2 times annual salary
If you’re young with no financial dependents and don’t own any property, the employer-provided life insurance may be enough. However, if you have outstanding debt, such as paying back student loans or if you have children you would like to put through college someday, oftentimes that death benefit won’t be enough to protect your family. Our recommendations vary depending on your life situation, but typically we like to insure clients with 5-10 times your annual salary.
- Death benefits only replace base salary
The death benefit does not take into account bonuses, commissions, secondary sources of income, or additional benefits like 401K contributions. Sales jobs are highly dependent on commission. Many of them offer a very low base salary, expecting the majority of money to come through commission. With that setup, the employer-provided life insurance won’t be enough.
- Change Jobs, Lose Your Coverage
Odds are, you’ll change jobs a few times over your career. This could be done voluntarily, such as a new career opportunity, or involuntarily due to a layoff, a change in job status, or the business could close altogether. Whatever the reason, the life insurance policy usually does not move with you. Getting one through H&K Insurance ensures you have coverage no matter your job situation.
- Coverage gets tricky as health declines
When you purchase a term life insurance policy, you are typically locked into a rate for 10, 20 or 30 years. If you need to quit your job due to a serious health issue, you will lose your group benefit and it will be very difficult to get an affordable policy, it at all, depending on your medical condition. You avoid this sticky situation if you already have a term life policy in effect.
- Lack of Spousal Support
Most families these days require two bread winners to put food on the table. Most policies do not provide coverage options for the spouse, and if they do not have coverage through their employer, and they pass away, it can leave a gaping hole in the family’s financial budget.
Purchasing life insurance is easily one of the most important decisions you can make, and because of this, you deserve to purchase from the best of the best. Call Brian Kilcoyne, our life insurance guru, at 617-612-6515 to discuss your options today.
Brian Kilcoyne, our life insurance guru, matches clients with custom policies all throughout the Greater Boston Area. He prides himself in protecting your assets just as much as he takes pride in watching his son do battle on the wrestling mat and skiing with his family. No matter if he’s in front of a client or atop a mountain, Brian puts forth his best effort in everything he does.
