7 Surprising Reasons to Say NO to Life Insurance at Work

During the benefits presentation from your HR department, it’s tempting to opt in to life insurance at work.  It may seem like a cheap and easy way to cross life insurance off your to-do list.

But not so fast! Don’t let the convenience of open enrollment tempt you into making a devastating financial mistake.

First, take a look at these 7 surprising reasons why life insurance at work isn’t your best option:

1. You Need More Coverage

Life insurance through work may only offer between $10,000 and $50,000 of coverage.  Do you need more than $50,000 of life insurance coverage?  Of course you do.

Most life insurance needs analysis tools recommend coverage equal to ten times your annual salary, at minimum.  Unfortunately, life insurance at work often caps your coverage at $10,000 to $50,000 so you can quickly see how inadequate life insurance through work can be.

(Check your need for life insurance using this quick Needs Analysis Calculator).

Buying an individual life insurance policy could allow you find coverage of up to $10,000,000 or possibly even more.

2. You’re Going to Leave Your Job

Even if you love your current job, deep down, you know it won’t be your last.  Americans on average will change jobs twelve times in their careers.

Did you know that most employer provided life insurance plans won’t allow employees to take their life insurance with them?  And your next job may not offer life insurance through work.  Going without life insurance, even for a few weeks in between policies is very risky.

And what about retirement? Losing your life insurance at retirement means that you’re missing out on the absolute minimum goal of each life insurance policy.

Making sure your final expenses are paid for.

Also, consider this: the reason you leave your job may be because you get sick.  You may never even return to the workforce.  Being without life insurance just at the time your family may need it most is a recipe for financial disaster.

If you were to buy an individual life insurance policy, you would be in control of that policy.  Keep it with you no matter where you end up working.

3. Your Employer Can’t be Trusted

Employers go out of business.  They cut back on providing benefits.  They even lay people off.  In other words, employers shouldn’t be trusted with securing your family’s financial future should something happen to you.

Life insurance is an easy expense to cut for an employer looking to reduce their costs.  If you’re relying solely on your employer to provide life insurance, you’re putting your family at risk.

Eliminate the risk of involuntarily losing your life insurance benefits by purchasing an individual life insurance policy.

4. You Need More Options

Everyone loves to have options, but life insurance from your employer is often one size fits all.  You have limited, inadequate coverage amounts available to choose from and rarely have any other options to add on to your policy.

Individual life insurance policies today come with many different features.   You can add options to get your money back if you outlive your term (Return of Premium), include coverage for your children (Child Rider) or even to use some of your benefit amount while living if you become critically ill or disabled (Accelerated Benefit Rider).

5. You Can Find it Cheaper Somewhere Else

Part of what makes buying life insurance at work attractive is its convenience.  It can be as easy as just checking a box.

But that is also what can make it more expensive.

Group life insurance policies bought at your employer generally accept everyone and charge each employee the same price.  Now obviously some employees at your company are less healthy than others and would be charged more in a traditional market.

So how do life insurance companies make up for potential losses on unhealthy employees?  By charging healthy employees more.

When purchasing your own life insurance policy, you are charged an accurate premium for your health class which could result in significant savings.

6. You Can Still Get a Policy Without an Exam

Another potential benefit of buying life insurance at work is that you can avoid the hassle of going at the poking and prodding that comes with a life insurance medical exam.

When applying for traditional life insurance, you had to schedule an examiner to come to your house to take your height/weight, blood pressure, and even a blood and urine sample.

Life insurance at work lets you avoid the hassle of a medical exam.  Just check a box.  But that convenience is no longer tied to group life insurance.

Several life insurance companies now offer individual life insurance policies that also allow you to skip the medical exam.

7.  Your Life Insurance Shouldn’t be Tied to Your Health Insurance

Although a large amount of group life insurance is provided by life insurance companies, a significant portion is also packaged at your employer’s health insurance company.

Again, this may seem convenient on the surface but have you considered the added risk this convenience brings?

Normally bundling insurance policies together makes sense but in case you haven’t noticed, the health insurance market is in turmoil in the United States.  Health insurance companies leave states every year. If your health insurance company decided to get out of your state, your bundled life insurance would leave with it.

Buying an individual life insurance policy from an A-rated insurance company significantly reduces the risk of losing your life insurance involuntarily due to a company leaving the marketplace.

Does Buying Life Insurance Through Work Ever Make Sense?

Yes.  But only in a few specific situations:

1. If it’s all you’ve got.  Life insurance is important.  Very important.  The sad thing is that most people know how important it is and still put it off, leaving them without coverage.  But you know what’s great about life insurance through work?  It’s super easy. There is usually no medical underwriting.  Often times you just check a box and sign your name at your next benefits open enrollment meeting and you’re done.  No long applications.  No urine samples and needles.  Just a box and a signature and you’ve got a little bit of coverage.  It likely won’t be enough coverage, but hey, some life insurance is infinitely better than none, right?

2. If it’s free or deeply discounted.  Some employers want to provide as many employee benefits as possible so they can attract and retain the best employees.  If you’ve got one of those employers consider yourself fortunate, thank them, and then ruthlessly take advantage of their kindness.  When an employer is offering to pay for all or even 50% of your life insurance, the proper response is always, “Yes, please.”  This is a no-brainer so let’s continue.

3. If you’re sick.  We’ve already discussed how life insurance through work doesn’t require medical underwriting.  Sure that makes it easy but it also makes it guaranteed, even if you’re sick.  If you have a serious medical condition, a Guaranteed Issue policy may be your only individual option to buy life insurance.  But if you’re part of a larger pool of healthy people at work, the insurance company will likely take you because the risk is spread around to everyone else as well.

So What’s the Alternative?

Now that you understand the importance of having your own life insurance policy, get some quotes online.  Life insurance is not as expensive as you think, especially if you’re still young.  Term life insurance policies allow you to lock in low rates for 10, 20, or even 30 years.

If you’re one of the unfortunate people who can’t qualify for a typical term life insurance policy due to medical reasons, ask about a “guaranteed issue” policy.  They don’t require medical underwriting at all.  Guaranteed issue life insurance policies may also be a great way to get a small amount of coverage until your health improves.

It’s no secret that no one likes to talk about death, especially their own.  But you owe it to your family to take care of this…today.

Need help? Feel free to Contact Us so we can find the best life insurance policy for you and your family.