It’s that time of year again, annual benefits enrollment at work. You get that familiar chime from an Outlook calendar invite showing you a list of times to meet in the conference room based on your last name. Yes, we have all been there. Appreciate the fact that you can relate because not everyone has benefits provided through their employers, especially for extra things like life insurance or disability coverage. But for those of you who do get life insurance through your employer, hold on for just a minute before jumping up and down thinking everything will be OK.

Most people feel pretty good about the fact that they have $50,000 or $100,000 in life coverage through work, which you should. It’s not mandatory by any means for your employer to even offer life insurance coverage and it will definitely help with a small portion of the financial obligations associated with losing someone, that is, if you happen to have the unexpected happen while you’re still at this job and it’s sudden and overnight. What do you mean, you ask?

Group life insurance has stipulations…

Many people don’t realize that you can only collect on your group life insurance policy if it’s inforce and you’re employed with the company when you die. Seems pretty straight forward, right? However, what most people forget to think about is that we usually end up spending some time in the hospital long before we pass away.

Here is an example to explain why life insurance through your job is not always the best safety net to rely on. If you were to get sick with cancer or some sort of other serious condition, or if you were severely injured in an accident, chances are you would be unable to work for a long period of time. In most cases, your employer’s benefits contract usually states that they will discontinue your benefits and terminate your employment if you are still not able to make it to work after a month or so. They’ve now cut off your only means of health insurance, life insurance, and any other benefits provided by the company.

group life insurance isn't enough

Now, let’s assume you made a full recovery a few months down the road. You’re out of the hospital and back home asking for your old job back or looking for a new one. Let’s say the next company doesn’t offer life insurance. Now you’re left to find private life insurance on your own. But wait a minute, now you have a pre-existing health condition, MS, or cancer, etc. The cost to insure you, if the insurance companies even will, can be upwards of 250,000 percent more expensive now than it would have been before the medical condition presented itself. Yes, I said 250,000 percent more expensive. That’s a table “P” rating on an A-Z scale that the insurance companies use to set prices based on your health compared to the average American.

I hate to talk about it, but we need to be realistic about a worst case scenario. Let’s say you get sick or injured and are in a hospital with no signs of ever getting out. Your employer then terminates employment and discontinues all benefits 90 days after last day worked. You cannot get life insurance anywhere now being on bed rest in a hospital, leaving your family with nothing besides what’s in your bank account which, for most, won’t go very far.

The last situation you should think about is for those loyal workers who stick with the same job for 30 years. None of us can guarantee our companies will be here in 10, 20, or 30 years from now. Do you think Enron employees ever thought they’d be out on the street with no retirement plan left?

Imagine you spent 30 years working hard for the same employer. You had life insurance, health insurance, disability insurance, and a 401K provided all of those years, and never once thought about carrying personal life insurance. Suddenly when you’re in your 50s, the company lays you off or goes out of business. Since you started working for them, you gained some weight, have high blood pressure and cholesterol, or acquired some other health condition now, like diabetes or cancer. Suddenly at 55, you’re uninsurable or a Table P health risk. This seems like the last thing anyone wants to think about as they approach a time in their life when they should be thinking about taking it easy and retiring.

The moral of the story is, be sure to purchase your own individual life insurance plan on top of what’s provided through work. Individual term life insurance is very cheap to buy, so why not do it? We have life insurance to protect us from the unexpected, but if you rely on only your company’s life insurance plan you’re left out in the dark when the unexpected does happens, like losing a job or getting ill. Life insurance is much cheaper than most people think it is. No one ever anticipates needing to use life insurance, but the unexpected happens. Be prepared and get a free and anonymous term life insurance quote today.


Photo credits to Kenny Louie


Related Posts:

Can My Job Affect My Life Insurance Rates?

Do I Need Individual Life Insurance if I Have Group Life Insurance?

What’s the Right Amount of Life Insurance?



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