Today, more Americans have employer-provided life insurance than have individual life insurance – six million more Americans, to be exact. Sounds like amazing news, right?
While this LIMRA statistic sounds good, it hides a handful of crucial facts you should know:
If you have employer-provided life insurance, it’s likely not enough. Even though most employer-provided life insurance coverage is one to three times your yearly salary, consider how long that money would last.
Let’s say your salary is $50,000 per year and you’ve purchased a plan entitling you to up to $150,000 of coverage. That sounds like a lot of money, but when you consider that the average American family spends just over $67,000 per year, that amount of coverage wouldn’t take care of even three years of typical expenses, let alone allow for saving, investing, and paying down debt.
As an added burden, your family may need to pay for health insurance, as well. For perspective, employers pay an average of $19,000 per year for health insurance for a family of four.
The percentage of employers offering coverage is declining. Although the statistic makes it seem like employer-based coverage is increasing, that’s not the case. Households that have life insurance coverage through their employer is down to 46% from a 1984 peak of 54%, due largely to the fact that fewer employers offer life insurance coverage.
It’s a benefit, not a guarantee. According to LIMRA, 73% of employees believe employers should be required to make life insurance coverage available; however, employers are not obligated to offer it. Even if your employer offers life insurance coverage now, it doesn’t mean they will offer it next year. With many employers tightening their budgets, benefits can disappear.
It doesn’t protect your insurability. What might happen if your health suddenly changes while you only have employer-provided health insurance, but then they eliminate the coverage and you no longer qualify for life insurance? Can you guarantee that your family will be financially secure if something happens to you?
Employer-offered group life insurance is also usually not portable, so you can’t take that coverage with you when you leave a job. Buying an individual policy prevents issues like this because it’s something you own.
Employer-provided life insurance is great, but individual life insurance is worth considering for its increased level of security. An online life insurance calculator might help you determine the coverage you need.
If you have any questions about coverage, please contact Rafail Insurance Group at (713) 429-1790. We look forward to getting you the most coverage for your budget and giving you the peace of mind you deserve.