The Dangers of Employer Sponsored Life Insurance

“I get life insurance through my job.” I absolutely hate it when anyone utter these words to me. Why? Because, obtaining “life insurance” through your job, is not technically having life insurance. Unless you plan on dying at work, It should be view as a benefit more than anything else. Opting into your employer sponsored life insurance is a good thing and I encourage you to do it since you can never have too much life insurance. (Think about it. If life insurance was free, how much coverage would you carry?) Unfortunately, obtaining life insurance through your employer isn’t an optimal solution for several reasons.

Imagine working at a company for over twenty years, and having your life insurance payments deducted from your check every pay period. Finally it’s time to retire, and you discover that you cannot take your life insurance policy with you. That’s right. Years of payments and now you have nothing to show for it, because you’ve been contributing into a group plan which only covers you while you’re part of the group. The worst part of this scenario is that you’re older, and odds are not in as great of health as you were years ago. These two factors, especially coupled together, will result in significantly higher premiums. Sadly, at a time where you’re about to experience a reduction income.

Now let’s assume you move from job to job, or your in a transient career field. Transition from employer to employer, at times undergoing probationary periods, may leave you with gaps in coverage. I personally am not one for the doom and gloom approach when speaking about life insurance, however life is very unpredictable. If something were to happen to you during one of those gaps, who would be responsible for your final expenses? How long could your family survive without your income? Having your OWN life insurance policy, even if it’s a term life insurance policy, will guarantee that you and the ones you care about will never be exposed to such risk.

Finally, insurability. This is going to be a reoccuring theme whenever I speak about insurance. The ability to purchase insurance is something people mistakenly take for granted. Insurance companies do not to grant substantial policies to unhealthy people. I often remind people, that you are probably the healthiest you are ever going to be right now. If for no other reason, insurability is the reason EVERYONE should consider investing in their own (even if it’s minimal coverage) as soon as possible.

Steve Isidor
Personal Insurance Advisor
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