When I meet with my clients and I ask them if they have a life insurance in place the response I will mostly get is “I have it through work.”
Working for a company that provides life insurance as part of the company benefits is really great.
Life insurance provided as a work benefit — also called group life insurance is just like your health insurance through work, they are subsidized, you may be required to pay just a little premium policy or if your fortunate you don’t even have to pay for it. There shouldn’t be a reason for you not to take advantage of perks like theses offered by your employer. It is a step ahead in creating a financial safety net for your family. However, you also need to realize that an employer-provided life insurance has its limitations.
So, before saying that you don’t need life insurance because you have it through work, take a look at these reasons why your life insurance through work may not be enough.
- It doesn’t provide enough coverage. Typically, the amount of coverage is one to two times your annual salary. The average annual salary in Canada is about $54,630, this means that group life insurance coverage ranges from $54,630 to $109,260. It sounds like it’s a lot and may be sufficient for some, but in many cases, it may not be enough to cover ongoing living expenses once one of the income earners unexpectedly pass away. Financial experts recommend that you need to have a life insurance coverage of at least 10 times of your annual salary to allow your family to maintain your current lifestyle.
- It is a benefit NOT a GUARANTEE, your employer is not obligated to provide it to you, so in the event the company needs to cut expenses they can limit or even eliminate this benefit without your consent. You can wake up one day with less protection
- You can’t take it with you because it is NOT PORTABLE. Nowadays, people rarely stay on their jobs for a long period of time. If you switch jobs, you get laid off, fired or you decide to become self-employed, your employer will not transfer your insurance to the next place of your employment. You are not even sure that your next employer will offer the same benefit. In a very uncertain time that we are in right now, the last thing you want is to have gaps in your life insurance coverage.
- Your health situation may change. Two of the determining factors that make up the cost of your life insurance policy is your health and age. The younger and more insurable you are, the less expensive your monthly payment. If all you have is your group life insurance and you are unexpectedly forced to leave your job because of a medical condition, you are losing your insurance coverage and because you are older and because of your health situation, it’ll be too late for you to get your personal insurance plan at an affordable rate (if you can still get one). You may not have insurance coverage just when your family is going to need it the most.
The lesson here is to take the perks that your company offers you, but you have to make sure that you are not living any gaps to ensure that you and your family are properly protected. You can’t predict what can happen to the economy, and you can’t tell what your employer can do next. Do not let your future and your family’s protection to rely in the hands of a career that may change, transition, or end.
It is always best to keep your own personal insurance plan. Regardless of what may change with your situation at work, the economy or to your health, you have that piece of mind knowing that your family’s protection is in place and whatever happens to you, your loved ones are where you want them to be.