Is Employer Sponsored Life Insurance Worth it?
Every year when you renew your benefits at work, you are probably offered life insurance through your group plan. You might even be given a certain amount for free such as an amount equal to your salary or a flat amount of $50,000. Obviously, it is worth taking any amount that is free but what if you are offered the opportunity to purchase more coverage through your group plan? Group life insurance might be a good idea for some but you should understand all of the important facts about these plans before making your decision.
Insurance companies don’t require a medical exam for group coverage. The less stringent underwriting standards allow some with minor health issues to get covered at rates that they probably wouldn’t get with an individual policy. This results in a higher rate for everyone in the group. For someone who has minor health issues, group coverage might be the best way to go. For those in good health, an individual policy is almost always a much better choice. Your company should be able to give you a rate chart that will tell you the cost per $1000 of coverage if you are looking into adding coverage. Check that against a quote from an independent agent to see how much you will save.
Group coverage is generally not portable. If you change jobs or get laid-off, your group coverage usually ends but your responsibility to protect your family does not. Buying an individual plan will keep you protected throughout times like these.
Group coverage rates increase as your get older. Normally, insurance companies increase their rates every 5 years based on age bands. For instance, you would see your coverage rate per $1000 increase at age 35, 40, 45 etc. These rate increases can be costly over time when you consider that you could lock in a level rate for 30 years with a level term policy through individual coverage outside of your group plan.
Group coverage sometimes limits your amount of coverage. If you need a million dollars of coverage, your group plan might limit you to only $250,000. Because of the convenience of non-medical exam group coverage, some people will simply take the maximum offered by their group plan leaving them underinsured.
Group life insurance can be suitable for people with health issues, but even they should look at trying to get an individual policy. A good independent agent will gather all of your necessary medical information and shop your case to multiple insurance companies to find you the best offer. You can then compare any offers to the rates from your group plan. Those who are healthy should always look at individual coverage with level premiums. Using an individual policy could save thousands of dollars in the long run. We would welcome the opportunity to provide an analysis of your current group coverage versus an individual plan. Please feel free to give us a call at (310) 802-0300 or email us at quotes@archstoneagency.com if you have any questions.
Archstone Insurance Services, LLC is an independent agency that shops over 40 of the top life insurance carriers to provide huge savings on life insurance coverage for our clients. We are happy to answer any questions you might have about any of the insurance products we offer, your planning needs or your existing coverage. Feel free to call us directly at (888) 687-9444 or email us at info@archstoneagency.com. You can also visit our website at www.archstoneinsurance.com.
