In the time of grief, the last thing you want to do is leave your family with a lifestyle change because of financial strain. Life Insurance should be able to cover all your debts and support your dependents. We all understand the importance of life insurance but if your life insurance policy is provided through your employer, you may want to take a closer look at whether the life insurance coverage you have been provided is sufficient to protect and provide for your loved ones.
A life insurance policy should include paying off your credit cards, car loans, mortgage, education and making sure your spouse, children and any other dependents will be able to continue with the lifestyle they are accustomed to living. There are 4 reasons why relying only on employer provided insurance can be a bad idea.
1. Insufficient Policy Value
While employer provided life insurance is very affordable or even free, your policy’s value may not be enough to take care of the needs of your loved ones. Industry recommendation is to have coverage equal to five to eight times your annual income while most employer provided life insurance is only one to two times annual salary. This gap can lead to a significant burden for your family if you were to pass away suddenly.
An important factor to take into account when thinking about life insurance coverage is Death Benefits. Some employers offer death benefits however bonuses, commissions, health insurance and retirement contributions are not taken into account. Each family’s situation is different so speaking to your insurance agent or risk management specialist is highly recommended.
2. No Guarantee Of Coverage
Like any employer benefit, you are limited to the choices provided by the employer. In fact, nothing is guaranteed. Rates and plan offerings can change suddenly and could suddently leave you with no life insurance coverage.
3. Portability Is A Challenge
Like most employer benefits, you cannot take employer provide life insurance with you if you were to leave the company. While you may qualify for life insurance today, you don’t want to risk leaving your company in the future and be unable to qualify for an individual policy. Additionally, the cost of life insurance goes up and you grow older and could become unaffordable in the future.
4. Lack Of Coverage For Spouse
Running a family takes teamwork. In many cases, employer provided life insurance doesn’t offer life insurance for your spouse. It is important to consider loss of income for not only the primary breadwinner but for both partners. Even in the rare instance that you have a one income family, the passing of your spouse could lead to a need for a full time nanny or daycare, a maid, etc. which can add additional financial burden on you.
There’s no reason not to take advantage of any free or inexpensive life insurance offered through your employer, but it most likely shouldn’t be your only source of life insurance coverage.
For all of these reasons, so it is highly recommended that you consider purchasing your own policy. At McLean Insurance, we don’t advocate not taking advantage of any free or inexpensive life insurance offered through your employer, however, in most cases we do strongly encourage investing in supplemental coverage. This will not only ensure that you have ample coverage but also are not at risk of losing life insurance coverage just when your family is most likely to need it.
To learn more about Life Insurance offered through McLean Insurance, you can visit: http://www.mcleaninsurance.com/services/personal-asset-protection/life-insurance/ or call 703.790.5770 to speak to a qualified life insurance advisor.