Getting life insurance from your employer is delightful as it gives you peace of mind. When you look at it, life insurance from your employer works pretty much the same way as general life insurance. Smaller amounts are deducted from your paychecks as premiums to keep your insurance policy going. However, life insurances from work may not be enough to cover for the entire family.
Reasons Life Insurance Through Your Employer Isn’t Enough
Mostly, you only get a year’s worth of income when you are covered through a company. In some rare cases, the payout may be two to three times of that pay, but rarely more.
This means that, if an employee earned $80,000 a year, the company will payout lump sum amount of $80,000 to $240,000. It’s true that it looks like a huge amount but still, your family won’t be able to keep a balance in their lives with this amount of money. Experts recommend that the amount should be at least 10x of the annual income.
This means that life insurance from your employer is not enough. Let’s have a look at some more reasons:
1) It’s Not Enough
Life insurance policies offered by companies are usually group policies. These group policies are valid for all the employees working in the company. The death benefit they provide to the family ranges from a year’s salary to twice or thrice of that, which usually is not enough. There may be children in the family, an ill member and debt that need to be paid off, and with this amount of money, it sure becomes daunting and stressing.
On the death of the wage earner, the home expenses usually drop from 8% to 10% only which is a minimal percentage and hardly affects the monthly budget of a family. Hence, life insurance policy from work isn’t sufficient enough.
2) Policy Ends When You Quit Or Get Fired
If you think life insurance from your employer will have you covered for the rest of your life, then you are wrong. This type of insurance ends when you quit or get fired from your company, hence it is just a temporary form of insurance.
Most of the companies follow this rule and don’t let employees walks out of the company with policies in their hand. This drains all the money that they have been paying as premiums from their paycheck for months.
3) You Have No Control Over The Policy
Life insurance policies from work are solely operated by the company, meaning, you have to accept to the company’s terms no matter what. This is bad for an employee because the company might increase the price of the policy a year after and you have no option but to accept it.
There are many employees who have an insurance policy from work but because it is not enough, they go for an additional individual policy to keep the future of their family secured. You should do the same. Check out life insurance comparison from iselect. 🙂