Am I safe if I only have group life insurance through my employer?

Q:

Am I safe if I only have group life insurance through my employer?

A:

Great question. It's a hard one to answer but one that I get on a regular basis. Many people get life insurance from a group benefit plan offered through their employer, but wonder, "Is it enough coverage for me?"

While it's hard for me to say over the internet whether you are "safe," here are a few things you should consider when trying to determine whether your employer's group life insurance plan is enough for you and your family.

  1. What type of insurance is it? With group life insurance plans, the most common coverage you will see is a term life insurance policy. While term life insurance policies are cheaper than whole life policies, they expire after a certain number of years. If you rely entirely on your employer's term life insurance policy and it expires before you pass away, you are left without coverage. While you can always apply for personal life insurance after that, some medical conditions might make you ineligible for coverage. In this case, it might be better to get your own insurance early on, before any medical conditions arise.
  2. What sort of limit do you have on your policy? The most common limit of insurance we see is $100,000 or less (the rule of thumb here is to get twice your annual salary). If this is enough for you, then you should be okay without personal life insurance.
  3. What's your employer's policy about employees leaving? When an employee is let go or quits, they usually have a few options for their group life insurance plans: they can convert it into an individual policy, they can cancel or lapse the policy, or they can carry the policy over to their new employer if it is with the same insurance company (find out What You Need to Know About Health Insurance Before Quitting Your Job).
  4. And finally, the big question: what can you afford? With a group life insurance plan, your employer is likely paying for most, if not all, of your premiums. If you cannot take any money out of your monthly budget for your own individual policy, then you will have to stick with the one offered by your employer.

There is no set answer for this question, but hopefully this will give you some kind of guide to help you decide whether getting a personal life insurance policy on top of your employer's group plan is worth it (learn The Perfect Age to Get Life Insurance).

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Written by Jacques Wong
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Jacques grew up around the insurance industry and began actively participating in 2013. Since then, he has gotten a Level 2 license, won an Insurance Council of BC award in 2015 for academic excellence in the insurance licensing courses and educates insurance professionals through PNC Learning.   Full Bio