Employers often provide several types of insurance policies as part of your benefits package, including life insurance. This can offer you a convenient policy to financially protect your loved ones in the event of your passing. But keep in mind that these products have several aspects you should consider when comparing them to individual plans. Let’s dive deeper into how employer-provided life insurance works and discuss why getting life insurance quotes for individual plans may be the right option for your needs.
Table of Contents
What is employer-provided life insurance?
Employer-provided life insurance, or group life insurance, is a life insurance policy provided by your workplace as part of your benefits package. These plans may cost less but aren’t necessarily the best option because you can’t take your policy with you if you leave your job. Plus, you might be more limited in your coverage options. Your death benefit may be too low, and you may not have access to life insurance riders.
Benefits of individual life insurance policies
Employer-provided life insurance plans can be quite limiting for many, which is why individual life insurance may be better suited to your needs. Here are some reasons to get an individual life insurance policy outside of your job:
1. You can keep your policy if you change jobs
If you leave or lose your job for any reason, you can’t take your employer-sponsored life insurance with you. But an individual life insurance policy will continue to cover you regardless of your job status, as long as you continue to make premium payments.
2. You may be able to get more coverage
Many employers only include $50,000 of coverage in employer plans because the IRS may tax you for any premiums they pay to offer you more than $50,000 in coverage. But for many people, this amount may not be enough coverage. Individual plans can offer a much higher death benefit, which can give you peace of mind knowing you can provide your loved ones with added financial securityfor several years if you pass away.
3. More flexibility with policy terms
Employer-sponsored plans tend to offer limited life insurance options. For example, you may be looking for a permanent life insurance policy with a cash value component, but your employer may only offer term life insurance. Additionally, you might not be able to get the riders you need.
Individual life insurance policies offer much more choice. You can decide whether you want term or permanent insurance and add on riders, such as an accelerated death benefit rider.
The bottom line
Employer-provided life insurance plans can be convenient but often lack flexibility, and you can’t take them with you if you change jobs. Individual plans, on the other hand, stay with you regardless of your job. You can get more coverage and have far more flexibility in picking your death benefit and policy terms. If you’re able to get a group life insurance plan through your employer, you could consider getting this policy and an individual plan to fill in any coverage and portability gaps. Whichever option you choose, make sure to shop around for several quotes to make sure you get the coverage you need at an affordable rate.
