As generous as this may be, this amount of coverage is typically not sufficient for most families. Because of this, you should consider buying your own life insurance policy.
What is Life Insurance?
Before diving into why your employer’s policy may not be enough, we have to take a step back and ask one fundamental question: What is life insurance? Life insurance is essentially a form of income replacement. It’s how someone can continue to contribute years’ worth of financial support to their family even if they’re no longer here to do so. See Also: 15 Best Paying Jobs Out Of College | 2023 Ranking For this reason, many experts often recommend having coverage equal to 10 to 12 times your salary. Essentially, this would be the same thing as if you continued to work for another 10 to 12 years supporting your family. If both spouses work, then each of you should get a separate contract up to this amount.
Why You Might Want Your Own Life Insurance Policy
Here are a few important reasons why someone should consider getting a life insurance policy outside the one their employer provides.
Increased Death Benefits
The first reason is that group life insurance is typically far below adequate coverage. These policies are generally only enough to cover the cost of a funeral and provide some additional cash. Once this money is gone, your family may start to struggle financially. Again, remember that life insurance should provide income replacement equal to 10 to 12 times your annual income. Therefore, you’ll most likely need a separate policy to fill the gap between what your employer provides and your family’s long-term needs.
Protection While You Change Employers
It’s common for employees to move from company to company in search of better career opportunities. However, as they terminate employment to go to the next job, they’re no longer covered by the former employer’s group life insurance policy. Therefore, it’s critical for individuals to have their own privacy policies in place. This can be especially necessary for people who plan on taking some time off in between jobs or transitioning to an occupation where life insurance won’t be provided (such as self-employment).
You’d Like a Different Type of Policy
Employer-provided group life insurance is almost always a term-style policy. Depending on your needs or financial goals, you may wish to pursue a permanent-style life insurance policy in addition to the coverage you already have. Permanent life insurance, such as variable universal or indexed variable universal, are policies that can build cash value and provide a guaranteed death benefit for life. The insured can even borrow against this cash value and use it for other purposes if they desire.
The Bottom Line
While having group term life insurance through your employer is helpful, in most cases, it won’t be adequate. Consider getting your own policy to have coverage equal to at least 10 to 12 times your annual salary. Also, consider getting your own life insurance policy if you believe you’ll need protection while switching jobs or if you’d like a permanent-style policy that has a cash value component.
Recommendations
4 Weeks Certificate Program That Will Pay You Well Top 15 Quick Certifications That Pay Well In 2022 18 Cheapest Colleges in Canada 2022 for International Students 45 Free Online Courses With Printable Certificates 2022 | START NOW 10 Tuition-Free Universities in USA For International Students in 2022
