Employer-provided life insurance is the norm these days. This facility is a part of the perks which most employers now provide, in order to not only attract good talent, but also towards achieving some degree of employee satisfaction. Employers usually cover their employees under a group insurance policy, which has plenty of advantages, but also some downsides. Here are just some of the reasons which highlight the need of getting an additional life insurance policy over your employer that is necessary.
It rarely provides adequate coverage
One of the most important piece of advice when buying life insurance, is, to take stock of your assets and liabilities, and then decide on the coverage amount. After all, the primary purpose of purchasing life insurance is to ensure that your family gets sufficient coverage. However, this concern is seldom addressed by a group insurance policy which an employer provides. The coverage provided under a group insurance policy is usually based on the employer’s salary, and pre-fixed salary slabs. If an employee is earning an annual income of Rs.10 lakh, they may get an ‘x’ amount dependent on their annual income. However, because requirements and responsibilities differ from person to person, this amount may be sufficient for one person, while being grossly inadequate for another.
Employer-provided life insurance can be withdrawn anytime
Group life insurance plans which are provided by employers, offer coverage subject to yearly renewal. However, this is also just a perk which the employer provides, and can be withdrawn anytime, at the latter’s discretion. For instance, a new board of directors has stepped in and decide to scrap this perk in place of some other. What do you do then? If you do not have an individual life insurance policy, you will be left without any insurance coverage, which is a very unwise thing to do.
Age can drive up premiums
Another important thing to remember when buying life insurance is to buy it when you’re still young, and in relatively good health. If you are relying solely on your employer-provided life insurance policy, then you may be in for an expensive shock whenever you do decide to purchase a life insurance policy for yourself, at a later age. The applicant’s health is an important part of the insurance underwriting process where the insurer decides on the coverage amount, term of the policy, and premiums based on the applicant’s overall condition. As you grow older, your body undergoes natural changes, and your health tends to deteriorate. This is the reason why insurers charge older applicants with higher premiums, due to the higher risk involved, as compared to younger applicants who are relatively healthier.
No option to convert to an individual policy
One of the major drawbacks of your employer-provided life insurance is the absence of the option to convert to an individual policy. This means that you cannot alter your coverage amount as per your needs. Also, your cover will cease as soon as you change your employer. When it comes to group insurance, the employer (provider) decides the terms of the policy and coverage. Also, seldom can employees have add-on riders attached to a group plan to get customised coverage, making the policy of little use.
The facility of group insurance, while it is an important one, is not always sufficient. When getting life insurance, it is most important for the policyholder to assess their financial situation, their family’s needs, and other factors before deciding on the coverage they need. After all, it is your family’s happiness and well-being that is of utmost importance.