Life insurance is one of the key components to any household finances. Most of us with families who depend on us realize the importance of providing for them should something happen to us. It is also important to think of who will be responsible for your debts should something happen to you.
Often, employers provide some type of life insurance benefits for their employees, but is it enough? According to a recent article from Nasdaq, there are three things to consider when looking at the life insurance your employer provides:
- It rarely provides sufficient coverage
At best, employers’ policies usually provide death benefits equal to or double the employee’s annual salary. That may sound like a lot, but experts say that married individuals, especially those with children or significant debts, should ideally have anywhere from five to 12 times their annual salary in coverage. - Coverage usually ends when you leave your job
When employment ends, so does your insurance coverage, as a rule. Some policies offered through employers are considered “portable,” meaning you can convert your group policy coverage into an individual policy. However, you’ll be responsible for the entirety of the premium once employment ends, potentially making such a policy prohibitively expensive and unaffordable. - Buying your own policy is wise
It’s best to consider your employer’s insurance coverage as merely a helpful job benefit, and to plan to buy sufficient coverage for you and your family. Ensuring you have proper life insurance coverage will give you peace-of-mind in knowing your family’s finances are covered in the event of your death.
Forbes.com recommends you consider using a live person to help in your death planning. A real, live insurance agent can walk you through the application and underwriting process. A knowledgeable and dedicated insurance broker or agent can help you save money by choosing the best carrier for your particular situation.