If your job offers a group life insurance plan, then it makes sense to just take a policy through them, right?
But is it really the right thing to do?
Here’s my thoughts……
Transcription follows below…..
Hey, this is Jeff Rose, goodfinancialcents.com with another good financial tip. A common question I get from working individuals is,
“Jeff, do I need to buy my life insurance outside of my employer or should I just use the insurance that is provided through my company?”
It’s a very, very good question because most likely if you have different kinds of life insurance through your employer most likely it is really easy to sign up, it’s very, very, very inexpensive and it just doesn’t take a lot of work. It’s a group plan.
Group Plans Make Sense for pre-existing Conditions
Most likely if you have any pre-existing conditions you just sign up and you’re good to go. It is deducted out of your pay check. You don’t think twice about it. One example of this is somebody that has diabetes. It will most likely be cheaper to go through your employer as life insurance rates for diabetics can be costly especially if a severe case.
Let me give you a few considerations of why you would want to purchase that life insurance through a third party provider such as one our reviewed best life insurance companies.
Number one: What happens if you leave your job? What happens if your company goes under or if you have to relocate or another better opportunity comes around. Now you have to hope that your new employer offers life insurance.
You have to hope they have a group plan that you can easily get into, and you have to hope that it’s going to be affordable. If you don’t have those options available that’s why you would want to consider having life insurance through a third party provider. That way if you do change jobs you’re already locked in. You don’t have to worry about it. If cost is an issue, most likely if you do a third party provider it’s not going to be that much more expensive to have life insurance through them.
How Much Life Insurance Does Your Job Allow?
Another thing to consider, a lot of employers don’t allow you to have a lot of life insurance. Sometimes it is maybe twice your salary, three times your salary. I’ve seen every single variation so it just really depends on your company. Typically what I see is a lot of people have the minimum amount of life insurance possible, say $50,000 or $100,000. It’s not anywhere close to what they actually need for their family. Since we had kids, I have always had at least one million dollars in term life coverage. You cannot get that much through a group plan.
That’s another reason why you want to go to a third party provider. Hopefully you’re going to have a life insurance specialist, whether that be an agent or financial planner that can offer life insurance, and they can sit down with you and truly try to figure out how much life insurance you really need, and which of the best life insurance carriers will fit you best.
Those are just some considerations of why I think you need to purchase life insurance not through your employer or your company plan, but through a third party provider.