Picture this: You land an exciting new job with great benefits: vacation time, health insurance, 401(k)… even free lunch once a week!
They offer group life insurance, too – two times your annual salary. That sounds like a lot, right? In many cases, it might not stretch as far as you think.
Let’s say you make $50,000 per year. A benefit of $100,000 can make a big difference to your family – for a while. But through the years, could it really go the distance to pay for expenses and reflect the legacy you want to leave for your family? Think about how far $100,000 could go to pay for these common needs over time:
Private student loan debt
Mortgage or rent payments
Utilities, groceries and other costs of living
Life insurance is, by its very nature, a deeply personal financial decision. When you rely exclusively on group coverage through work, you miss the opportunity to personalize your coverage based on your specific needs. Here’s why that matters.
4 Reasons to Consider Getting Your Own Life Insurance Policy
The experts at Life Happens*, a nonprofit organization dedicated to educating the public on the importance of life insurance in financial planning, offer these four disadvantages of relying on your group insurance alone:
If your job situation changes, you may not be able to maintain the same coverage. Whether that means being laid off, moving from full-time to part-time, or leaving the company… in many cases, an employee can’t retain their policy when circumstances change.
Coverage may end when you retire or reach a specific age. Many people tend to lose their insurance coverage when they continue working past a specified age or when they retire. This could mean losing your insurance when you need it most.Related: Term vs. Whole Life Insurance: What’s the Difference?
It’s a benefit… not a guarantee. Your employer can change or stop offering life insurance coverage without your consent, since the contract is between your employer and the insurer. With many employers in cost-cutting mode, employee benefits might (unfortunately) be among the first things on the chopping block.
Your options are limited. This type of coverage is not tailored to your specific financial needs. Furthermore, your employer might not offer the option for you to purchase extra coverage as you need, leaving you exposed.
*Life Happens does not endorse any product, company or insurance adviser.
ERIE life insurance products and services are provided by Erie Family Life Insurance Company (home office Erie, PA), a member of Erie Insurance Group, and are not available in New York.
This story was originally published in 2019.
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