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The Life Insurance Blog

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in making decisions about their life insurance needs


The Top 5 Myths About Employer-Based Life Insurance

Feb 19, 2015 5:00:00 PM

3679686_sIf you work full-time for an employer, you know that there are many perks to being an employee.

One of those bright spots is not having to worry about high health insurance rates or life insurance coverage, right?

Wrong—at least from a life insurance perspective.

The truth is, your employer-provided life insurance policy may not provide you the coverage you need. If you want to maximize your coverage, the onus is on you, not your employer.

At IntelliQuote, we know most people think they are set on the life insurance front if their company has purchased a policy on their behalf. If you, too, are under that impression, today we’re going to shatter that illusion and provide a better reality.

1) Your employer-based life insurance is all that you need: The insurance you have with your job may cover your final costs, but just barely. What about all of the other expenses you pay month in and month out? In other words, that new house you just bought, or the new car you just leased? Are there enough funds left over to pay for these expenses for months or years to come so your spouse and family stay afloat? If these series of questions has you scratching your head or frowning, it’s time to purchase additional insurance. Also keep in mind that employer-provided life insurance is non-transferable. If you get laid off or leave your job your company can cancel your policy whenever they choose.

2) Only the working spouse needs life insurance: If you’re the sole breadwinner in your house, you may believe that you are the only person that needs insurance, right? But the reality is that it doesn’t matter if you commute to work in a car or by walking into another room in your house, both spouses need coverage. If your stay-at-home spouse were to pass away suddenly, who is going to watch the kids or do the cooking? If you’re working full-time, that means you’ll have to pay for childcare or for someone to help you with maintaining your household, and those costs can really add up on just one salary.

3) My coverage should only be double my annual salary: In theory, this reasoning works: That means that your family can continue their lifestyle based on your coverage for at least a year. That’s assuming, of course, that they won’t incur any additional major expenses and your family can adapt to the loss of your income. It’s a dangerous assumption to make, and if you’ve already passed on, it’s too late. Getting your own coverage allows you to plan ahead and to have adequate coverage to protect your family for the worst case scenario.

4) Employees with no dependents don’t need a lot of coverage: Children are expensive, so people automatically think that single folks lead a less expensive life. Errr….we’d argue that people who don’t have children spend just as much, if not more than those with offspring. And remember that your coverage can also be used to pay off any debt remaining at the time of your death, like student loans or credit card debt and especially the mortgage on the house.

5) Term life insurance is all that I’ll ever need: Most employer-based life insurance is term life insurance and is, therefore, affordable. But what if you want to convert your term life insurance to permanent insurance in the future? Or if you want to blend your term life policy with permanent life insurance for even more benefits? Purchasing a separate policy ensures that you have fewer, if any, limitations should you leave your employer.

While having employer-based life insurance is a good thing, we strongly advise that you consider buying additional insurance to give your family the best protection possible.

Are you looking to increase your family’s protection and your sense of well-being? Why not set aside a few minutes today and investigate your options by getting a half-dozen quotes in less time than it takes you to finish your lunch hour?

Click to receive your free life insurance quote.