4 Things You Probably Don’t Know About Your Life Insurance at Work

For the first time ever, more Americans have employer-provided life insurance (108 million) than have individual life insurance coverage (102 million), according to a new LIMRA study. And while that statistic sounds good, it actually hides a few important facts you should understand.

1. There’s more to the stat than meets the eye. When you dig a little deeper into the study, you find that households that have life insurance coverage through their employer is actually down to 46%, from a peak of 54% in 1984, so the fact is that the percent of employers offering coverage is declining.

2. If you have it, it’s most likely not enough. Most employer-provided life insurance coverage is one to three times your salary. So if you make $50,000, having up to $150,000 of life insurance sounds like a lot, right? But if you try to put that money to work in today’s interest rate environment, you’ll soon find out it doesn’t go very far. And if your family needs to spend $50,000 each year, what are they going to do after the third year?

I would also add that while your salary may be $50,000, what about your other benefits like health insurance? Employers pay an average of $19,000 a year for health care for an employee with a family of four. What if your family had to pay for their health insurance from that $50,000, too?

3. It’s a benefit, not a guarantee. Most Americans believe employers should be required to make life insurance coverage available (73%, according to the same study), but the fact is employers are not obligated to offer it. And remember that just because your employer is offering it now, doesn’t mean they will next year—or at any point in the future. A lot of companies are in cost-cutting mode, and benefits like life insurance can disappear without notice.

4. It doesn’t protect your insurability. Think about what would happen if your health changes while you only have employer-provided health insurance, but then they drop the coverage and you’re no longer able to get life insurance? Or what if you lose your job, or change jobs and the new employer doesn’t offer life insurance as a benefit?

Typically, employer-offered group life insurance is not portable, meaning you can’t take that coverage with you when you leave a job. Some have the option to convert it to permanent life insurance, but what if you can’t afford that option? Buying an individual policy prevents this because it’s something you own.

The bottom line, then, is that it’s good to have employer-provided life insurance, but don’t ignore the larger need you may have for individual life insurance coverage, too.

Use an online calculator like this Life Insurance Needs Calculator to get a working idea of what you need. Then if you need help to figure all this out, reach out to an agent. They can help you get the most coverage for your budget—something that you know will be there in case the worst were to happen. If you don’t have an agent, you can use this Agent Locator to find one near you.

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by Marvin H. Feldman

Marvin H. Feldman, CLU, ChFC, RFC, is president of the Feldman Financial Group in Palm Harbor, Fla., and president and CEO of Life Happens. He is a 41-year Million Dollar Round Table member and was the 2002 president. He is a 33-year member of the MDRT Top of the Table and a past Top of the Table chairman. He also is the recipient of the 2011 John Newton Russell award, the highest honor bestowed on an individual by the insurance industry.

  1. My husband, and I got our Life insurance license together, because we saw a need in our community. Lets stop with the go fund me pages, Chicken Dinners, or begging at the gas station for money to help put your loves ones away. If you, or a family member is in need of life insurance and live in NC call us today!!!!

    1. 8-10 times your annual salary is a good place to start but it does get more detailed and beneficial to speak with a Licensed individual or broker, life myself, to get exactly what you and your family need both financially now and later.

    2. Hi Anil, You probably have purchased your insurance already at the time I am seeing this however, if you have not please know this: Each family’s life insurance needs vary which is to say that there is not one-size-fits-all solution or formula for a family of four.

      When the time comes and you need to buy insurance there are two choices you should make: The second choice is: 1) what coverage amount 2) what company 3) what price.

      The first choice is what Agent should you use because a good agent who is “independent” vs tied to a single company will be about to listen to your needs, diagnose your situation and make recommendations to fit your needs and budget from a large selection of insurance companies. A good Agent will make a complicated subject sound simple and back up everything that is explained in writing. Lastly, a good Agent will not pressure you.

      For more information please write at robert@buckleyagency.com

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