For the first time, more people in the U.S. are securing life insurance through their employer rather than with an individual policy according to LIMRA. With 108 million Americans now choosing to get covered through their jobs vs. 103 million going with a third party, more people are trying to discover whether or not this form of life insurance is right for themselves and their family.
On the surface, it seems like a no-brainer to acquire at least some supplemental life insurance through the workplace. After all, it’s usually incredibly affordable, if not entirely free. However, as with most things in the insurance world—it’s not that straightforward.
Ensuring you choose high-quality, comprehensive life insurance coverage is the most crucial aspect to consider when picking a policy. In the event of the unthinkable, the last thing anyone wants is their family’s financial insecurity thanks to subpar insurance. Frankly, workplace insurance can be just that.
Is getting life insurance through work the best decision and if so, will it be enough? Also, how important is securing a supplemental plan as well? Let’s find out.
What Is Workplace Life Insurance?
Have you ever held a job that offers health benefits? If so, you’ve likely been offered life insurance as a health benefits add-on. Though insurance and workplace policies do vary, many basic group plans don’t cost a dime. Then in the event of your passing, your beneficiaries can expect financial assistance in the form of a payout.
Most workplace life insurance payouts run between $25,000—$50,000, or are equal to the employee's salary rounded up to the nearest $1,000. Some companies also offer additional supplemental insurance in case the benefit isn’t sufficient enough to cover your family.
The option to enroll for a workplace life insurance policy typically occurs when employment begins and may even be included automatically. All you need to do is verify your desired beneficiary.
Advantages of Workplace Life Insurance
All this sounds like a great deal and usually—it is! Especially if there’s no extra charge passed onto you, we do recommend saying yes to workplace life insurance. Even if the payout is relatively low, why not provide your family with a little extra financial help during a difficult time?
Other reasons to consider workplace life insurance include that:
Workplace life insurance is typically more affordable than term or whole life insurance, if not entirely free. If this is the case, there’s really no reason to pass it up. During a difficult time, anything helps.
It’s Easy to Qualify
No matter your background or pre-existing conditions, most people will qualify for workplace life insurance policies—no questions asked. Health exams aren’t necessary, and as long as you agree to the policy’s terms and stay employed with the company, coverage is guaranteed. This also makes it a fantastic option for those with health issues.
Forget shopping around trying to find the best rate. Workplace life insurance policies are usually uncomplicated, straight-forward, and all the terms are laid out for you. Just say yes and you’re covered.
Disadvantages of Workplace Life Insurance
Workplace life insurance has its downsides too. The most critical thing to consider is not allowing yourself to become complacent with this basic form of life insurance alone. Unless you're single without dependents, most life insurance policies acquired through a job won’t be enough.
Other important workplace life insurance downsides:
It’s Tied to Your Employer
Once you leave your job, say goodbye to your life insurance. This doesn't only mean risking a gap in coverage, but by having to reapply, your monthly premiums may increase. This risk skyrockets if you’ve developed any health issues.
It's a Low Payout Policy
The far majority of workplace policies may be free, but they also offer low payouts. It may be enough to cover funeral expenses and immediate financial expenditures, but it’s not enough to fully support most families.
It's Not Personal
Most workplace policies are essentially one-size-fits-all plans with no consideration for who it's covering or their personal monetary circumstances. Purchasing supplemental life insurance as your primary policy—in addition to a workplace plan—will ensure complete coverage.
Do I Need Supplemental Insurance Too?
Always remember to realistically plan and calculate your family’s future expenses. Honestly, how would your finances look in the event of your passing? How would your family get by? It’s never an easy conversation, but from rising funeral costs to college funds, most basic workplace life insurance payouts won’t be nearly enough to cover the future finances of your loved ones.
This is why it’s important to secure a supplemental, third-party insurance policy not associated with your workplace. With third-party life insurance, every plan is personalized. Whether your kids are close to leaving the nest, or your brood seems growing by the minute, find the perfect policy created just for your family—not your employer.
Lastly, remember that there’s nothing permanent about workplace life insurance. Even if you’ve punched the numbers and it is enough to cover your family’s expenses, if you ever leave your job, you’ll have to start at square one. With a supplemental insurance policy though, coverage is guaranteed until the term ends.
Ready to secure high-quality life insurance coverage to supplement your workplace life insurance policy? Trust JennyLife to match you with comprehensive plans for as little as $5/month. No doctors. No exams. Just the peace-of-mind of your family’s financial security—no matter what.