Should You Buy Life Insurance Through Your Employer?

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Employer life insurance has pros and cons. Read on to learn more about them. 

If you have people in your life who rely on you financially or who might get hurt financially if you were to pass away, then it’s important to put life insurance in place. Without it, your loved ones might struggle if you’re no longer around to earn an income.

When it comes to buying life insurance, you have choices. You could shop around with different life insurance companies and compare rates. Or you could see if life insurance is available through your employer.

Many companies offer life insurance as a workplace benefit, and there can be advantages to signing up for it. But there can be drawbacks that you should know about as well.

The pros of getting life insurance through work

It’s common for employers that offer health insurance to subsidize the cost of those premiums. Similarly, many employers that offer life insurance policies also subsidize the cost so that it’s less expensive than buying coverage on your own.

Also, employer life insurance programs generally guarantee you coverage, regardless of the state of your health. And these life insurance policies typically do not require you to undergo a medical exam. So if you have health issues and are worried about being denied a policy elsewhere, it could make sense to sign up for life insurance through your employer.

The cons of getting life insurance through work

One major downside of getting life insurance through an employer is that your coverage is often tied to your job. This means that if you were to lose or leave your job, you’d lose your coverage in many cases.

Also, because employer life insurance programs tend to accept all participants without medical underwriting, they tend to offer limited coverage. And the amount of coverage you’re eligible for may not suffice for giving your loved ones the protection they need.

Term life coverage through an outside insurance company may be a better bet

You may decide to sign up for life insurance through your employer. But it’s also a good idea to lock in a term life insurance policy that isn’t tied to your job in any way.

The good news is that term life insurance can be quite affordable. So even if you’re not looking at an employer subsidy, you may find that you can swing your premiums comfortably.

Forbes says that the average monthly cost of a 20-year, $500,000 term life insurance policy for a 30-year-old male is just $19. That’s $232 a year.

Of course, this doesn’t mean that’s what you’ll pay for a similar policy. The rate you’ll be charged will hinge on a number of different factors, including your age and the state of your health. And if you need a higher amount of coverage for your loved ones, you’re likely to face higher premiums.

The point, however, is that term life insurance can be an affordable option. So even if you’re inclined to get life insurance through your job, you may want an outside policy on top of that.

Our picks for best life insurance companies

Life insurance is essential if you have people depending on you. We’ve combed through the options and developed a best-in-class list for life insurance coverage. This guide will help you find the best life insurance companies and the right type of policy for your needs. Read our free review today.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
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