If you think about life insurance as a means to provide for your family, you should think beyond the group life insurance your employer may provide. When insured by a group policy, you may feel a false sense of security in believing you have adequate coverage.
While some employers may offer your regular salary in life insurance benefits several times, you must ask yourself, is this enough? How long would this amount last, given your current debts and expenses? There is also the question of providing for your children and their higher educational needs. It is essential to take the time to calculate how much is enough to cover your family’s financial needs should the unthinkable happen. This is especially important if you are the sole wage earner for the family.
As a rule of thumb, people should have seven to ten times their annual salary in life insurance, particularly younger people with families to raise. More youthful people must realize that now is the optimum time to purchase life insurance; their policy will cost much less than waiting a few years.
If you are beginning a new job or thinking about switching jobs, there is vital information about group life insurance benefits you should know about.
If you leave a job, the downside of most group policies is that you cannot take the coverage with you; it may or may not be portable. Even if the range is mobile, the insurer will typically require conversion of your term policy to a higher priced whole life policy. Indeed, it is preferable to accept the high-priced conversion policy rather than having no coverage at all.
Advantages of group life policies:
Employers provide guidelines, most often at no charge to you.
o, Can be used as a supplement to an individual life policy.
Most policies are guaranteed issues with no medical underwriting required.
Disadvantages of group life policies:
Group term life insurance has no cash value and cannot be borrowed against.
There is no flexibility or choice about the terms of the policy.
Regarding life insurance, do not leave your family financially precarious. Ensure your coverage is more than a fraction of what is needed.