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Is Life Insurance Through Work Enough?

Life Insurance
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Woman gives a presentation to coworkers about life insurance through work

Like many Americans, you might have access to an employer-provided life insurance policy through your workplace. It's also likely you haven't thought much about it.

Many companies offer life insurance through work because it's a popular and valuable employee benefit. If you can get discounted or even free life insurance coverage through your job, it's a win-win benefit. Right?

Not quite. Relying solely on employer life insurance can have some potential downsides that are important to consider because it could leave your beneficiaries and loved ones unprotected. It might be time to examine your coverage and think about your personal needs.

Here's what you need to know about employer-provided life insurance policies and what to think about as you explore your options.

Life Insurance as an Employer-Provided Benefit (Group Life Insurance)

When you receive life insurance coverage through work, it's also called group life insurance. Typically, employers will offer this as a benefit at no (or low) cost to you. Research from the Bureau of Labor Statistics shows that about 60% of private-sector employers offer group life insurance, and 98% of employees take it. For many, getting employer-provided insurance is an easy way to get some coverage with little to no cost involved.

While that's a great start, people sometimes get into trouble because they assume their work coverage is enough. It's easy to think that you don't need anything else since you already have life insurance at work. But as you move further along in your career, you may outgrow the life insurance provided by your employer, especially after you get married and have children.

Something else to consider is that you don't own the policy — your employer does. If you ever quit or lose your job, there's no guarantee you can keep your coverage. While some companies let you keep your policy as long as you pay the premiums, others cancel coverage for former employees.

For many, it means, more or less, workplace life insurance is temporary life insurance.

Should You Get Life Insurance Through Work?

When you're young, single and just starting your career, chances are your current life insurance needs aren't very high. Maybe you need a life insurance policy to cover your final expenses or debts. Your workplace coverage may be enough for your needs, for the time being.

However, that can quickly change. A common myth is the life insurance policy provided through work is all you need. But as you move up the ladder and make more income or get married and have a family, your life insurance needs can increase quite a bit. Suddenly, your employer-provided life insurance plan may not cover all of your needs or protect your family if the unexpected happens.

While you're still young and healthy, looking at a policy that's separate from the one provided through your job can give you the chance to potentially lock in coverage that's designed to be affordable and lasts your entire career, even if you change jobs — as long as premiums are paid.

Does the Plan Provide Enough Coverage for Your Spouse?

One of the main benefits of a life insurance policy is it provides a death benefit to your loved ones that can help take care of their financial needs. Check the policy limits to your coverage, and decide if your death benefit provides enough to help your spouse pay for your burial, cover existing debt and pay future bills, such as your mortgage payment.

If it's not, you might want to consider supplemental insurance.

Even if you have enough employer-sponsored life insurance, remember that your coverage is likely temporary. If you suddenly lose your job, you could be stuck without insurance, leaving your family unprotected. Something else to think about is what happens if you voluntarily change jobs later in your career and you can't bring your policy with you. Your income could be significantly higher by then, so you might need to pay more for your coverage needs. You also may have some additional health issues, which could potentially require a medical exam or even cause a provider to deny you coverage that could fit your budget.

How Much Supplemental Life Insurance Do You Need?

If your family relies on your income, you may need more coverage to help protect them beyond your employer-provided life insurance. No matter where you are in your career, a supplemental life insurance policy could make sense — and help put you in control of your financial future.

Sitting down with a financial representative to go over your needs might help you figure out the best options for you. They can work through the numbers with you and help calculate how much additional coverage will help keep your family financially secure after you're gone.

Consider the types of life insurance policies available to you. Whole life, universal life or term life insurance are all options that might be an excellent fit for your supplemental coverage needs. That way, you can think about coverage through work as an addition to your life insurance policy rather than your only policy.


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Information provided is general and educational in nature, and all products or services discussed may not be provided by Western & Southern Financial Group or its member companies (“the Company”). The information is not intended to be, and should not be construed as, legal or tax advice. The Company does not provide legal or tax advice. Laws of a specific state or laws relevant to a particular situation may affect the applicability, accuracy, or completeness of this information. Federal and state laws and regulations are complex and are subject to change. The Company makes no warranties with regard to the information or results obtained by its use. The Company disclaims any liability arising out of your use of, or reliance on, the information. Consult an attorney or tax advisor regarding your specific legal or tax situation.