Reasons Your Work Life Insurance Is Not Enough.
My Colleague’s Family Learned the Hard Way.
My coworker, Mike, was a great guy with two young kids. He had the “free” life insurance from our company, which was twice his salary. He thought he was all set. When he died suddenly from an aneurysm, his wife received a check for $150,000. It sounds like a lot, but after paying off their mortgage, there was almost nothing left. She had to get a job immediately while grieving. His policy wasn’t nearly enough to replace his income. It was a brutal wake-up call for everyone in the office about how inadequate work insurance really is.
The Day You Leave Your Job, Your Family’s Protection Vanishes.
I Was Fired, and My Life Insurance Was Terminated.
I had worked at my company for 8 years and had a sizable supplemental life insurance policy through them. I felt secure. Then, a corporate restructuring led to my position being eliminated. In my exit paperwork, I saw the line item: “Life Insurance coverage terminates on your last day of employment.” My heart sank. I was now 42, unemployed, and had to find new coverage for my family at a much higher rate. Never tie your family’s long-term security to a short-term job. Own your own policy.
How an Individual Policy Gives You Control, Portability, and Peace of Mind.
My Insurance Follows Me, Not My Employer.
In the last 15 years, I’ve had four different jobs. I’ve been promoted, laid off, and started my own business. Through all of it, my life insurance has remained constant. I bought a 30-year term policy when I was 30, and it’s my personal property. It doesn’t matter who signs my paycheck. That ownership gives me incredible control and peace of mind. I know that no matter what happens with my career, my promise to protect my family is secure. It’s a foundation of certainty in an uncertain world.
“Supplemental” Group Insurance: Convenient, But Is It a Good Deal?
I Saved 40% By Shopping Around.
During open enrollment, I was tempted to just check the box for more supplemental life insurance. It was so easy. The rate was about $50 a month for $500,000 of coverage. Out of curiosity, I spent 15 minutes online getting a quote for a private, individual policy. Because I was healthy, the quote came back for the exact same coverage for only $30 a month. The group plan was convenient, but that convenience was costing me an extra $240 a year. I bought the private policy and never looked back.
Why a Healthy Person Is Overpaying for Group Life Insurance.
You’re Subsidizing Everyone Else.
Group life insurance has to cover everyone in the company—the healthy, the sick, the young, and the old. To do this, they create a blended rate. This means that if you are young and healthy, you are paying a higher premium to subsidize the cost for the older, less healthy employees in the group. When you buy an individual policy, the price is based on your health alone. You get rewarded with a lower rate for being healthy, instead of being penalized for being part of a group.
You Can Be Denied Coverage When You Try to Convert Your Group Policy. Here’s Why.
Conversion Isn’t Always a Guarantee.
When I left my job, I thought I could simply “convert” my group policy into an individual one. I was wrong. The fine print said I could apply to convert, but the company could still underwrite and deny me based on my health. Because I had developed a health condition while employed, they denied my application. The “option” to convert was not a guarantee. An individual policy that you own from the start is the only true guarantee that your coverage can never be taken away.
Lock In Your Own Rate While You’re Young and Healthy. Don’t Rely on Your Employer.
I’m 50, But I Pay the Premium of a 30-Year-Old.
Twenty years ago, I bought my own 30-year term policy. My premium was locked in at about $35 a month. My friends who relied on their work insurance have seen their supplemental rates increase every five years as they get older. Today, they are paying well over $100 a month for the same coverage I have. By locking in my own rate when I was young and healthy, I have saved thousands of dollars over the years and will continue to save for the next decade. It’s one of the smartest financial moves I ever made.
The “1x Salary” Myth: Why This Common Group Benefit Leaves Families Destitute.
A Year’s Salary is Gone in a Flash.
The standard “free” life insurance from an employer is one times your annual salary. Let’s be brutally honest about what that means. If you make $80,000 a year, your family gets a check for $80,000. If they have a $250,000 mortgage, it doesn’t even make a dent. It might cover funeral costs and keep the lights on for one year. Then the money is gone. To truly protect a family, you need 10-15 times your income. The “1x salary” benefit is a token gesture that creates a dangerous false sense of security.
The Surprising Benefits of Owning Your Own Policy That Your HR Dept Won’t Mention.
It’s More Than Just a Death Benefit.
My individual policy has features my work plan could never offer. My term policy is convertible, meaning I can change it to a permanent policy later. It has an accelerated death benefit rider, allowing me to access the funds if I become terminally ill. If I had chosen a cash value policy, I could even take tax-free loans from it. An individual policy is a flexible financial asset that you control. Your group policy is just a temporary, one-dimensional benefit that belongs to your employer.
How to Use Group Insurance as a Temporary Stop-Gap While You Secure a Real Policy.
The Smart Way to Start a New Job.
I just started a new job, and the first thing I did was sign up for the free group life insurance. But I didn’t stop there. I knew that coverage was inadequate and temporary. I am using it as a free, temporary safety net for the next 30-60 days while I apply for a proper, individual 20-year term policy that I will own myself. Once my individual policy is approved and in place, the group plan will just be a nice little extra. But my family’s real protection will be the policy I own and control.