Is your employer-provided life insurance enough?

For millions of working Americans, employer-provided life insurance is a valuable perk. However, it may not provide enough coverage for your loved ones after you’re gone. Check out this article for information on when it may be necessary to purchase additional coverage.   

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No two families are alike, and while life insurance provided by your employer is a great starting point, it’s important to take the time to weigh your needs against the coverages provided. | Photo credit: Adobe Stock

Do you have a life insurance policy provided by your employer? Millions of working Americans receive group term life insurance as a workplace benefit. If you're covered by a group policy at your job, it's important to understand how it works and whether or not the provided coverage is enough.

Group life insurance: Life insurance on a group of people, usually issued to an employer for the benefit of employees. Each group member holds a certificate as evidence of his or her insurance.
* definition provided by American Council of Life Insurers

Although employer-sponsored life insurance policies are a convenient and oftentimes affordable—or free—job perk, there are several reasons why you may want to purchase an additional individual policy on your own to help protect your loved ones. Here are just a few:

  • Your workplace policy may not provide enough coverage for your family’s needs.
    Many employer-provided life insurance policies offer benefits that are one to three times your current salary. For someone who is debt-free, single, and without dependents, that might be enough. However, this is often not the case. The reality is many families need much more than one, two, or three times their annual salary to secure their dependents’ financial future.

    Imagine you make $60,000 a year, securing somewhere between $60,000 to $180,000 in life insurance for your family. While this certainly sounds like a lot of cash, you may find that it doesn’t go very far after end-of-life bills, paying off debts, and covering your family’s daily living expenses.

    Southern Farm Bureau® Life Insurance Company has a great online tool that can help you calculate the right amount of life insurance for you and your family. Click here to determine your family’s needs now.1
     
  • It’s not guaranteed.
    With group-term life insurance, your coverage is linked to your employment. You could lose this coverage if you leave the company, at which point you will be left to seek out an individual life insurance policy. 

    In addition, it is important to note that your employer can drop this benefit at any time. Just because they are offering a life insurance policy this year does not mean they will offer it next year.
     
  • Buying an individual policy may become more difficult as time passes.
    Generally, the earlier in life you purchase a life insurance policy, the more affordable it is going to be. Rates typically go up with age, so that means if you’re 40, you’re likely going to pay more than someone who is 30 and in similar health. Many life insurance policies also require a health examination, so purchasing a policy after you develop a health condition may prove to be difficult or expensive.

    There are two major types of life insurance sold to individuals – term and whole life (sometimes referred to as “permanent”). Term pays if death occurs during the term of the policy, which is usually from one to 30 years, and whole life pays a death benefit whenever you die – even if you live to 100, according to the Insurance Information Institute. Click here to explore the life insurance policy types offered by KFB Insurance through Southern Farm Bureau® Life Insurance Company.

So, is employer-provided life insurance enough? No two families are alike, and while life insurance provided by your employer is a great starting point, it’s important to take the time to weigh your needs against the coverages provided. At KFB Insurance, we want to make choosing the right life insurance policy for your family’s needs as stress-free as possible by giving you the information you need to make educated decisions. We’re proud to offer custom-fit life insurance coverage through Southern Farm Bureau® Life Insurance Company. Click here to get in touch with a local agent who can help you pick a plan that’s right for you.

1The amount of life insurance coverage that you may qualify or apply for is subject to medical and financial underwriting by Southern Farm Bureau Life Insurance Company in Jackson, MS.