In a recent LIMRA study it is reported that for the first time in history there are more Americans with work-based life insurance vs individual life insurance, roughly 6 million more to be exact. Sounds good, right? Let’s dig a little deeper…
The Good…Many of our clients say “I have Life Insurance through my employer, so I don’t need an Individual policy”. Did you know that most Employer-based policies only cover 3 times your salary? So, if you make $50,000/year the policy pays $150,000. This could possibly cover your family for 3 years, but what happens to your family’s income after that? Let’s also think about added expenses such as increased healthcare expenses. Many employers pay up to $19,000 a year in health insurance plans per employee as part of a benefits package. Your family would no longer have these benefits thus being subjected to pricey individual healthcare plans.
The Bad… Employer-based Life Insurance is NOT guaranteed year to year. Employers are constantly trying to cut costs if even to find ways to continue to pay for Employee-based health insurance. One common way to cut costs is to discontinue Employee-based Life Insurance. Individual Life Insurance policies only get more expensive as you get older. Let’s say you have been working for a company for 15 years that has offered Life Insurance and now they have discontinued this benefit so you need to purchase Individual Life Insurance. Unfortunately, now that rate will be much higher than if you had purchased it 15 years ago.
The Ugly… In the above scenario you have been working for your company for 15 years and enjoyed the added benefit of Employer-based Life Insurance. Suddenly, they drop this benefit and you are 15 years older, you may not be as healthy as you were 15 years ago and thus your Life Insurance insurability may have declined making it harder to find Individual policies that will accept you.
The Uglier… You have worked for your company for 35 years, you are now 65 and finally get to retire and live a less stressful life. Guess what, that Employer-based Life Insurance policy probably will not come with you!
Back to The Good… There is still time to look into an Individual Life Insurance policy! While the Employer-based policies are a good buffer, don’t put all your eggs in one basket. Contact Coleman Insurance to help you find the best coverage option for your budget.