Many of us receive our life insurance through our employers, and for good reason. Buying life insurance this way is often cheaper than buying it on the open market (and is sometimes free). But there may be reasons to buy life insurance on the open market. Here are three.
Your employer may not offer enough life insurance. If your death hurts your loved ones financially as well as emotionally, we recommend you obtain coverage. How much? Five to 10 times your annual salary is a good guide. And be sure you include any “extra” income in your calculations, such as bonuses and freelance work.
Your coverage could disappear. When you get a new employer, you typically lose your life insurance coverage as well. Your new job, if you have one, may or may not offer coverage. This lack of portability is particularly problematic as we age and we’re less likely to be healthy enough to qualify for an individual life insurance policy at an affordable price.
You don’t get to choose the insurance provider. It’s possible that the insurance carrier your company has chosen is rated lower than you’d like and the insurance you paid for won’t be there when you need it. Your carrier’s AM Best rating will tell you whether the company is financially stable or not.
While it’s certainly wise to take advantage of free or inexpensive life insurance offered by your employer, you may want to supplement that insurance with insurance from other sources. Just be sure you purchase enough supplemental insurance to ensure that you’re covered if the worst happens and you lose your employer-sponsored insurance at a bad time, such as when your health is declining.
We can help you navigate your life insurance options and choose what is right for you given your individual financial circumstances and goals. Call or email us today.