When an insurance agent calls or approaches you selling life insurance, your response is likely “No, thank you, I already have life insurance through my employer.”
And the agent’s rebuttal, hopefully, begins something like “That’s great! I’m glad you have coverage.”
Life insurance offered by an employer can be a great benefit, and we encourage our business-owner clients to consider offering it to their staff. But is your employer’s group policy the best coverage for you, as an individual? When your premium is taken out of your paycheck, you might not even pay attention to:
- What type of policy you have
- What the policy covers, and
- How much you pay each month
Life insurance through your employer is most likely a term policy. So when you retire, leave the company, or become permanently unable to work there due to an injury, there is a high probability you will no longer have life insurance through that employer. And beyond the age of 65, obtaining new life insurance can come at a daunting price for most people.
It is hard to fathom something as fundamental as life insurance being dependent on your employment when we know that in the grand scheme of things, our lives are a whole lot more than who we work for.
But enough philosophy.
Here’s what you really need to think about. A group life insurance policy is written without taking into consideration the health and habits of the individual members of the group. It’s called a pool rate.
So, just to illustrate the point, let’s say you happen to be the only one at your office who exercises regularly and doesn’t smoke or drink or wrestle alligators while skydiving. None of that would have any effect on the premium you pay as a part of the group. You’d pay the exact same rate as your co-workers who live on the edge.
On the other hand, if you bought an individual life insurance policy through your own agent, it would be written according to tiered rates which, frankly, favor those who are very healthy, and would likely be much less expensive.
If, however, you do choose to remain a part of that group policy, you can still save money by taking the maximum that you can get from the policy for free and then buying any extra coverage you feel you need through your own agent.
If you are currently a part of a group life insurance policy but would like to see what your options are, call your local Horihan Insurance office today. We’ll give you a free consultation and review of your employer-based policy, and we’ll show you where we can improve on it, or just fill in some gaps in the coverage.