It’s a common answer when we ask clients if they have life insurance. They respond by saying that they have life insurance at work. While life insurance at work can be a good supplement to other policies you have outside of work, there are some serious risks involved by only relying on life insurance coverage provided to you by your employer.
Top 5 Risks of “Life Insurance At Work”
Risk #1: Employment Statuses Change
The employer providing benefits to you today may not necessarily be your employer tomorrow. Job opportunities do sometimes end abruptly and this can mean that your life insurance and other insurance benefits can end abruptly as well, leaving you without any coverage at all. If you have liabilities and family who are dependent on you and your income, having a lapse of life insurance coverage is just one more thing to keep you up at night and it puts your family’s financial security at unnecessary risk.
Risk #2: Health Issues Arise Making People Uninsurable
In the event that you lose your job after many years of relying only on the life insurance you have at work, you could potentially have health issues and these health issues could get in the way of your ability to acquire new life insurance coverage. Remember, you don’t have the right to purchase life insurance. You do have to go through a medical exam and underwriting to qualify to buy any life insurance coverage with any sizeable death benefit. If you do find a life insurance product that does not require a medical exam, be prepared to pay much higher premiums for this benefit. You’ll also find that the coverage amounts available are going to be smaller than what you may need.
When Lynsie’s management position was eliminated after a corporate merger, she found herself unemployed and uninsured. Lynsie admits, “Looking back, I had a false sense of feeling financially responsible by only relying on life insurance through my employer. If I had any idea this was going to happen, I would have never handled my insurance decisions this way. I kick myself everyday because now I’m unable to qualify for new life insurance coverage because of my diabetes.”
Risk #3: Employer Life Insurance Can Be More Expensive
While it may be more convenient to make quick decisions about your life insurance program while sitting in your company’s HR department, making the time to meet with a financial services professional outside of your workplace, will usually give you more life insurance coverage for your money. Simply put, it is well worth your time to compare the cost of life insurance at work with what you can purchase in the marketplace.
Risk #4: Life Insurance Coverage Options May Not Be Enough To Suit Your Needs
The standard menu of life insurance options offered by your employer may not be sufficient enough to take care of your obligations in the event of the unthinkable. Don’t just settle for the limited menu of options that your employer offers. Looking at life insurance coverage options outside of your workplace gives you a broader sense of what is available. Don’t limit yourself to just a few options. Every situation is different. Ideally, you want to find the policy that is best for you.
Risk #5: It’s Easy To Get Reliant On Employee Benefits
Employers generally provide employee benefits to increase employee loyalty and to retain employees for longer periods of time. It’s no secret that the cost of providing benefits is far less then high employee turnover and new employee training costs. This is smart on the employer’s part, but it can keep an employee from having the courage to take advantage of other opportunities because they fear losing their benefits.
Next Steps
Are you starting to realize that having life insurance exclusively through your employer is not necessarily in your best interest? Contact us to find out if you’re adequately covered. We are happy to look at your life insurance needs and give you a professional recommendation of what is in your best interest.
