Is My Life Insurance Policy From Work Enough? (2024)

Ticking the box for life insurance during open enrollment or when you start a new job feels like completing an important task. Your family is now protected for the worst! But is it enough?

Unfortunately, probably not.

Group life insurance is a great perk that many companies offer in their benefits package. It allows employees to get life insurance coverage without a health exam or filling out insurance applications. A relief for the employee and a sign that your company cares about protecting your family, if the worst was to happen.

However, many financial professionals worry that this benefit is lulling individuals into a false sense of security. Often times, people sign up for their benefit from work and never consider their life insurance needs again. Even as their family structure and financial needs change.

Group life insurance has limitations and, for most families, doesn’t offer enough coverage to support your loved ones if you passed. So, before completely checking off the “get life insurance” box in your head, consider these three reasons why you might want to get your own life insurance policy in addition to the policy offered by your employer.

This post is sponsored by Bestow, a trusted term life insurance provider that offers a fast and easy application process without a medical exam. As always, the opinions expressed are entirely my own.

3 Reasons Your Life Insurance from Work Likely Isn’t Enough

If you’re young and don’t have dependents or significant debts, your life insurance coverage from work may be enough. But for families who need coverage to support their kids or loved ones? It’s usually only enough to get you started. Here’s why.

1 – Coverage Ends When You Leave The Job

What if, tomorrow, your employer lays you off? Hopefully, you have a robust emergency fund and a plan to get you to your next job. But if your only life insurance policy is provided by your employer, your coverage will end your last day on the job. Leaving you without protection if something happens before you find a new gig – or if you new job doesn’t offer life insurance as a benefit.

Now, if that happens, you would have options. You may be able to convert your group policy from work into an individual policy (uncommon and expensive) or reach out to a life insurance provider to apply for your own policy.

But here’s the thing. Life insurance typically gets more expensive as you age and if you’ve developed health problems, you may not be approved.

Applying for term life insurance coverage today means locking in a set rate based on your current age and health, as well as getting a policy that can move with you through job changes. And with life insurance offered by Bestow, you can apply online in just 10 minutes for low-cost coverage that doesn’t require a health exam.

Don’t lose coverage when you need it most

There are far too many heartbreaking stories out there about individuals who are diagnosed with cancer or develop a chronic health condition and need to leave their jobs to care for themselves – only to lose their life insurance coverage when they might need it most.

Group life insurance policies can only cover active employees. If your health deteriorates and you need to leave your job, you want a life insurance policy you own that continues to cover you. If possible, it is always best to obtain your life insurance before medical issues occur.

2 – Coverage Limits Are Less Than Most Families Need

One of the most common questions we get is, “How much life insurance do I need?”

Well, it depends on your family. A common rule of thumb is 7 to 10 times your annual income for families with dependent children. This is typically enough to cover your mortgage – so your family doesn’t have to move if you pass, other debts, and provide some financial cushion for your spouse and kids.

Group life insurance, however, doesn’t cover nearly that much. According to LIMRA, small companies offer an average of $25,000 to $50,000 in flat coverage. Larger companies may offer 1-2x your annual salary.

This is a great perk, but if you have dependents, likely isn’t enough to cover your family’s needs.

How to determine how much life insurance coverage you need

While rules of thumb are great, you want to consider your family’s unique circ*mstances before settling on how much life insurance is enough.

For instance,

• How long until your kids are grown and no longer dependent on you?
• Do you have a mortgage you would want to pay off if you passed?
• Do you have a co-signer on your student loans that you wouldn’t want to stick with the bill after you’re gone?
• Should you include enough insurance for your family to take time off from work to grieve or provide a runway for a spouse that’s been out of the workforce to find a job?

3 – Your Company Benefits Can Change

Many of us have faced the ups and downs of company benefit changes. Changing health insurance coverage or reducing how much your employer is willing to pay. Limiting how much vacation time you can roll over at the end of the year.

And sometimes, changes in life insurance coverage.

Company benefits aren’t guaranteed. They can change with the health of your company or based on negotiations with the group plan provider. The options you have today may disappear or become more expensive in the future, you just don’t know.

If you work for a large stable company, changes might seem unlikely. But by choosing your own level term life insurance policy, you can lock in a low-cost rate that stays the same every month for the duration of your policy while also getting the amount of coverage you need.

Make Sure Your Family Is Protected with Sufficient Life Insurance

Group life insurance is an excellent benefit and one I’m glad companies offer. It means more families have life insurance coverage than ever before. However, while having some life insurance is good, having the right amount of life insurance is crucial for complete family emergency and estate planning.

There are a lot of myths out there about how hard it is to get life insurance and how much it can cost. Luckily, the reality is that term life insurance is affordable (Bestow’s policies start at just $5 a month) and technology has made the process of applying and getting coverage so much easier.

I got life insurance as soon as I was pregnant with our oldest because I knew my coverage from work wasn’t enough. But my husband, a stay-at-home dad, put it off for years. We weren’t sure if he needed coverage (he does) and he didn’t want to make time for a health exam.

Finally, last year, we found Bestow. I did my research and saw the A+ rating from A.M. Best (which measures the financial security of the policy backer) and loved that as a healthy person, my husband wouldn’t need a health exam. We started an application and in 10 minutes, we had a 20-year policy for him for just $27 a month!

A simple process we should have done years before.

If you’re relying only on your company’s life insurance benefit, take the time to review the coverage level and determine if it’s enough for your family. If it isn’t, don’t put securing coverage off for another moment. Start an application today.

Have questions about group life insurance or applying for coverage as an individual? Drop a comment below or contact us!

Note: Some online term life insurance companies, like Bestow, offer policies to healthy individuals without a medical exam. However, it is never advisable to omit health concerns or lie on your insurance application to secure coverage. If you are not honest on your application, it can void your policy when your provider discovers the discrepancy, even if you’ve been paying your premiums for years.