Life insurance is generally offered as an employment perk by many companies. While it is offered by the company with the best intentions, it’s not a good idea to rely on it completely. Here’s why:
Inadequate Coverage
In most cases, life insurance plans provided by companies will not be adequate to cover all the expenses of your family. This is especially true if you have dependent children and spouse. The ideal life insurance coverage should be at least 10 to 8 times your annual salary. If your company life insurance provides less than that, it is a good idea to purchase an additional life insurance policy. For e.g. If your company life insurance policy provides a life insurance coverage of 6 times your salary, you can make up for difference by purchasing an additional policy that is 4 times your salary.
Insurance Is Tied to Your Job
When you rely on your company life insurance policy, the coverage will exist only as long as you are an employee of the company. If you lose your job or decide to switch, you will have to forgo the insurance coverage as well. Therefore, if you don’t want to face such uncertainties, it’s better to take up a personal life insurance policy.
Coverage Might Be Affected If You Lose Your Health
Another major drawback of relying on company insurance is that you may lose out your life insurance coverage if your health declines. In case, you have to leave your job due to health reasons, you will lose the life insurance coverage when you need it the most. Hence, if you rely on your office life insurance, you may be forced to continue your job even if your health suffers.
Employer-Provided Insurance May Be More Expensive
Are you sure if your employer life insurance plan offers you value for money? The best way to find this out is by shopping around for insurance policies. If you are young and healthy, you will most likely find a better life insurance policy with additional perks and benefits. Most of the employee policies start getting very expensive as the employee reaches the age of fifty. At that age, buying a stand-alone policy may be cheaper than opting for insurance coverage through your employer.
The whole point of taking up a life insurance policy is to support your dependents and cover your debts. So take a closer look at your employer’s life insurance benefits and buy an additional policy if required. It’s always better to be safe than sorry.