Should I get life insurance through work

Should I Get Life Insurance Through Work?

Employers often offer life insurance as a benefit. So naturally, a question often asked is should I get life insurance through work? 

The idea behind work insurance is to pool risks among a group, such a company’s employees, in order to offer coverage at lower premium costs. While group rate life insurance includes a number of benefits, it comes with some restrictions. To assist you in determining whether life insurance through work is a good fit for your needs, let’s examine the pros and cons.

Benefits of Life Insurance through work:

  1. Affordability: When compared to individual life insurance policies, work life insurance often has lower rates or no cost at all to the employee. The insurance provider saves money by distributing the risk over a bigger group of insured people, making it more affordable for everyone.
  2. No Medical Exams or Health Questions: In many cases, group life insurance policies do not require employees to undergo medical examinations or provide extensive health information. This makes enrolling easier and may be especially helpful for people with pre-existing medical conditions.
  3. Convenience: Enrolling in and maintaining work life insurance is simple. Often, premiums are taken out of an employee’s paycheck directly, eliminating the need for additional payments. The procedure usually goes smoothly and happens during open enrollment periods.
  4. Financial Security: In the event that the covered person passes away, life insurance gives employees and their beneficiaries financial security. The payment can be used to support ongoing expenses as well as cover emergency costs.

Drawbacks of Life Insurance through work:

  1. Limited Coverage: These plans frequently offer a minimal level of protection, which might not be adequate to fulfill the various financial requirements of every employee. Your loved ones might not have enough insurance if you only rely on group coverage.
  2. Lack of Customization: Work policies might not have the option to alter coverage to meet specific needs. You might need to look for individual coverage if your policy needs certain features or riders, including critical illness insurance or riders for disability.
  3. Issues with portability: Not every group life insurance policy is transferrable. If your insurance is not transferable, you risk losing it when you quit or lose your job—possibly just when you most need it. Some policies may offer conversion options to individual policies, but these can be more expensive.
  4. Tax Implications: If the coverage amount exceeds a specific level, some group insurance may have tax implications. While this is not usually the case with individual life insurance plans, these tax implications may result in an increase in your overall tax bill.

The bottom line is life insurance that work offers is a great benefit. However, it will likely not be enough coverage to suit your family’s financial needs. Supplementing work policies with policies that you own and control is recommended. Our agents can help you understand the benefits work is offering as well as find options for life insurance policies that you can own. Click below to get a quote today.