Life Insurance for Employees

Life Insurance For Employees

Employers often provide life insurance for employees as a benefit. This type of policy is known as employer-owned or employer-provided life insurance. This insurance is typically provided at no cost to the employee, and the employer may pay the entire premium or subsidize a portion…but the employee NEVER owns the life insurance coverage.

Employer-provided life insurance is a great way to protect your loved ones financially if something happens to you while you’re still working. However, there are pros and cons to consider before deciding whether or not employer-provided life insurance is right for you.

In this comprehensive guide, we will take a closer look at employer-provided life insurance and help you decide whether or not it’s the right choice for you and your family.


FOR EASIER NAVIGATION:


REASONS WHY EMPLOYERS PROVIDE LIFE INSURANCE

  • To Attract And Retain Employees: Offering life insurance benefits can help employers recruit and retain the best talent. It’s also a way for employers to show employees that they care about their well-being and are invested in their long-term well-being.
  • Provide Financial Security: Another reason why employers provide life insurance is to provide financial security for employees and their families. Employer-provided life insurance can give employees peace of mind knowing that their loved ones will be partially taken care of financially if something tragic happens.
  • Increase Employee Satisfaction And Productivity: When employees know that their loved ones will be partially taken care of financially if they die unexpectedly, they can feel more secure and focused at work. This can lead to increased satisfaction and productivity on the job.
  • Protect The Business From Financial Loss: Employer-provided life insurance can help businesses protect themselves from the financial loss of a key employee. If a key employee dies, the life insurance policy can help the business cover the costs of recruiting and training a replacement.


IMPORTANCE OF LIFE INSURANCE FOR EMPLOYEES

Employer-provided life insurance is a great way to financially protect your loved ones in the event of your death while you’re still employed.

If something happens to you and you have employer-provided life insurance, your beneficiaries will receive a death benefit that can be used to help cover funeral costs, pay off debts, or simply provide short-term financial security for your loved ones.

While no one likes to think about their death, it’s crucial to have a life insurance policy in place in case the worst happens. Employer-provided life insurance is one way to partially ensure that your loved ones are taken care of financially if you’re not around to take care of them.


DIFFERENT TYPES OF EMPLOYEE LIFE INSURANCE

There are four main types of employer-provided life insurance:

TERM LIFE INSURANCE

Term life insurance only provides coverage for a specific period, such as five, ten, 20, or 30 years. If you die during the policy term, your beneficiaries will receive the death benefit. If you don’t die during the term, your policy expires, and no death benefit is paid.

Employers typically offer temporary term life insurance to employees because it is less expensive than whole life insurance. However, whole life insurance can be a good option for employees who want peace of mind knowing that their loved ones will be taken care of financially no matter when they die.


GROUP LIFE INSURANCE

Group life insurance is another type of employer-provided life insurance. It is a policy that is purchased by the employer and covers all employees of the company. The death benefit is paid out to the beneficiaries of the deceased employee.

Group life insurance is typically less expensive than individual life insurance policies because the risk is spread over many people. However, the death benefit is usually smaller than an individual policy because it is paid out to multiple beneficiaries.

Most employers only offer life insurance that covers one year of your current income or salary. While nice, this is rarely enough coverage to protect your loved ones and assets that you will leave behind.


SUPPLEMENTAL GROUP LIFE INSURANCE

Supplemental group life insurance is an additional insurance policy that employees can purchase through their employer. The coverage is in addition to the group life insurance coverage that the employer provides.

Supplemental group life insurance is typically more expensive than group life insurance because it is a separate policy. However, it can be an option for employees who want additional coverage, but it is rarely the best option compared to working with a company like Funeral Funds of America.


WHOLE LIFE INSURANCE

Whole life insurance is a type of permanent life insurance that provides coverage for your entire life. The death benefit is paid out to your beneficiaries regardless of when you die.


PROS AND CONS OF EMPLOYER-PROVIDED LIFE INSURANCE

Employer-provided life insurance has pros and cons that you should consider before deciding if it is right for you.


PROS:

Some of the pros of employer-provided life insurance include:

  • Free or subsidized life insurance – Employers typically pay all or subsidize a portion of the life insurance premium, making it a less expensive option for employees.
  • Automatic enrollment – Employees are often automatically enrolled in employer-provided life insurance, which makes it easy to get coverage.
  • Convenient – Employer-provided life insurance is typically easy to sign up for and doesn’t require a medical exam.
  • Guaranteed Eligibility – Employer-provided life insurance typically doesn’t require a medical exam, and employees with significant medical conditions can qualify.

CONS:

Some of the cons of employer-provided life insurance include:

  • Coverage is rarely enough – The death benefit of an employer-provided life insurance policy is usually capped at around one-year replacement of your income, which may not be enough to cover all the expenses and debt you will leave behind.
  • Coverage is tied to your job – If you leave, you will usually lose your employer-provided life insurance coverage.
  • Premiums may increase – The employer typically pays the employer-provided life insurance policy premium. However, the premium can increase if the insurance company raises rates or the employee’s health status changes.
  • Coverage can expire – Employer-provided life insurance policies typically have a term of five, ten, 20, or 30 years. If you don’t die during the policy term, your beneficiaries won’t receive a death benefit.
  • Not portable – Employer-provided life insurance policies are not portable, so you can’t take the policy with you if you leave your job.
  • Limited option – Employer-provided life insurance typically only offers term life insurance.
  • No cash value – Employer-provided life insurance does not have a cash value and cannot be used as collateral for a loan.


IS EMPLOYER-PROVIDED LIFE INSURANCE ENOUGH?

Employer-provided life insurance can be a good starting point for your life insurance coverage, but it is usually not enough. The death benefit is usually smaller than an individual policy because it is often restricted to an amount equal to your annual income.

Most financial experts recommend that you have at least five to ten times your annual salary in life insurance coverage. So, if you make $50,000 annually, you should have at least $250,000 to $500,000 in life insurance coverage.

Your employer-provided life insurance might be sufficient for young people who are single and have no dependents or if you have an independent spouse.

While employer-provided life insurance may seem sufficient, this amount is not enough for people with large families, non-working spouses, special needs dependents, with significant debt, mortgage, or other financial obligations; most company-provided life insurance policies will leave you underinsured.

When determining how much life insurance you need, you should consider your current financial situation, future financial goals, and your family’s current and future needs.

If your employer-provided life insurance is not enough, you may need to supplement with an individual policy to ensure that your loved ones are taken care of financially if something happens to you.

When buying supplementary or individual life insurance, you should work with a qualified life insurance agent who can do the shopping for life insurance and compare quotes from different insurers to find the best rate.

Funeral Funds of America is an excellent example of an independent life insurance agency that works on your behalf to get the lowest rates.


THE PROBLEM WITH EMPLOYER-PROVIDED LIFE INSURANCE

Employer-provided life insurance can be a good starting point for your life insurance coverage.

Here are some things to consider about employer-provided life insurance:

  • Employer-provided life insurance is that the coverage is not portable. You will usually lose your employer-provided life insurance coverage if you leave your job.
  • If you change jobs and you are not healthy enough to qualify for a new employer-provided life insurance policy, you may never be able to get any more life insurance coverage.
  • If you leave your job for medical reasons, you may lose your employer-provided life insurance just when you need it the most.
  • It will be expensive or impossible to convert your employer-provided life insurance if you leave your job because you will have to prove insurability.
  • Your employer-provided life insurance typically does not provide enough coverage for your spouse and children. This is especially true if you have a non-working spouse or special needs children.
  • Employer-provided life insurance can be expensive if your employer only subsidizes a portion of your policy. Premiums will increase as you get older.
  • Some employer-provided life insurance policies have a graded death benefit. If you die within the first two years of your policy, your beneficiaries will only receive a portion of the death benefit.


WHY EMPLOYER-PROVIDED LIFE INSURANCE CAN BACKFIRE

If you depend on employer-provided life insurance as your only policy, you could be in for a rude awakening.

Here’s why:

  • Most employer-provided life insurance policies are called “group term life insurance.” That means the policy is only in effect for as long as that company employs you. So, if you leave your job. get laid off or retire, and your life insurance coverage goes away.
  • Group term life insurance policies often have much lower death benefits than individual policies. That’s because the employer buys coverage for all its employees at once and gets a volume discount. But that also means the payout to your beneficiaries will be much smaller.
  • Your employer may TERMINATE your life insurance policy without warning at any time. So, even if you’ve been with the company for years, there’s no guarantee your coverage will still be in place when you need it.


HOW WOULD YOU KNOW IF YOUR EMPLOYER-PROVIDED LIFE INSURANCE IS RIGHT FOR YOU?

There are a few things to consider when deciding whether or not employer-provided life insurance is right for you. You should consider how much life insurance you need.

Employer-provided life insurance typically provides a death benefit of one to two times your annual salary, but this may not be enough to meet your family’s needs.

You should also consider the type of life insurance policy your employer offers.

Some employers only offer term life insurance, meaning the policy will only provide coverage for a specific period. Once the term expires, you will no longer have life insurance coverage unless you renew the policy or purchase a new one.

Other employers offer whole life insurance, a type of permanent life insurance. This means that as long as you continue to pay your premiums, your life insurance coverage will not expire.

Finally, you should also consider the cost of the life insurance policy.

Employer-provided life insurance typically costs less than an individual life insurance policy because the employer pays all or a portion of the premium. However, this doesn’t mean that employer-provided life insurance is always cheaper.

You should compare the cost of the employer-provided life insurance policy with the coverage it provides to make sure you’re getting the best value for your money.

Your employer-provided life insurance may be right for you if:

  • Free – It’s offered at no cost to you.
  • Generous – It provides generous guarantee issue amounts and low premiums.
  • Portable – You can convert it to an individual policy when you leave your job.
  • Additional riders – It offers additional riders, such as long-term care insurance.
  • Easy enrollment – It’s easy to enroll in the program.

Talk to an insurance professional if you’re unsure whether employer-provided life insurance is right for you. They can help you compare your options and choose the best life insurance policy for your needs.


WHAT HAPPENS TO YOUR EMPLOYER-PROVIDED LIFE INSURANCE WHEN YOU LEAVE YOUR JOB?

Employers provide life insurance as a benefit to current employees. If you leave your job, your employer-provided life insurance policy will usually terminate. This is one of the most significant drawbacks of employer-provided life insurance.

If you’re leaving your job to retire or for any other reason, very rarely will your employer allow you to convert your employer-provided life insurance policy into an individual policy. If you can, it is often prohibitively expensive.

If you’re leaving your job for another reason, occasionally, you may be able to keep your employer-provided life insurance coverage if you’re willing to pay the premiums yourself. This is called continuation coverage.

Continuation coverage is usually more expensive than an individual life insurance policy because the insurance company doesn’t have the same group discounts that they would if you were still employed.


LIFE INSURANCE POLICY OPTIONS IF YOU LEAVE YOUR EMPLOYER

  • Cancel your employer-provided life insurance policy – If you’re leaving your job, your employer will often automatically cancel your employer-provided life insurance policy.
  • Convert your employer-provided life insurance policy into an individual policy – If you’re leaving your job, you can sometimes convert your employer-provided life insurance policy into an individual policy. This will usually require medical underwriting and can increase your rates significantly.
  • Inquire if your employer-provided life insurance is portable – Some employer-provided life insurance policies are portable, so you can take the policy with you when you leave your job. This is usually a good option if you’re healthy and can’t qualify for an individual life insurance policy.
  • Keep your employer-provided life insurance coverage – If you’re leaving your job, you may be able to keep your employer-provided life insurance coverage if you’re willing to pay the increased premiums yourself. This is called continuation coverage.
  • Buy an individual life insurance policy – If you’re leaving your job, you may want to buy an individual life insurance policy. This is often the best option to save money and qualify for more coverage than your employer-provided life insurance.


WHAT ARE THE BENEFITS OF INDIVIDUAL LIFE INSURANCE?

Individual life insurance policies through Funeral Funds of America offer many benefits for employees, including:

  • You own the policy, so your employer can’t cancel it – You can keep the policy even if you leave your job.
  • You can choose the amount of coverage you need – With an individual life insurance policy, you can choose the amount you need. This allows you to ensure your family is sufficiently taken care of if something happens to you.
  • You may get a lower premium – If you’re healthy, you may get a lower premium on individual life insurance.
  • You can choose the term length that fits your needs – With an individual life insurance policy, you can choose the term length that fits your needs. This allows you to ensure you’re covered for as long as needed.
  • It’s portable – So you can keep it even if you change jobs.
  • You can name anyone as the beneficiary – With an individual life insurance policy, you can name anyone as the beneficiary. This allows you to ensure your family is taken care of if something happens to you.


WHAT ARE THE DIFFERENT TYPES OF INDIVIDUAL LIFE INSURANCE?

  • Term life insurance – Term life insurance is the most affordable type of life insurance. It provides coverage for 5, 10, 20, or 30 years.
  • Whole life insurance – This type provides coverage for your entire life. It’s more expensive than term life insurance but also permanent and has a cash value component that you can borrow against.
  • Universal life insurance – This type of life insurance is similar to whole life insurance but has more flexible premium payments and death benefit options.
  • Index universal – This type of universal life insurance has some of the features of whole life insurance but also offers the potential for cash value growth.
  • Variable universal life – This type of universal life insurance offers more flexibility than other types. It also has investment options that can offer the potential for cash value growth.

When shopping for an individual life insurance policy, work with a qualified life insurance agent who can compare the premiums, coverage limits, and rider options for you.


Which type of life insurance is right for you?

The best type of life insurance for you will depend on your needs and budget. Talk to an insurance professional to see which type of life insurance is right for you.


EMPLOYER-PROVIDED LIFE INSURANCE VS. INDIVIDUAL LIFE INSURANCE

Employer-provided life insurance has some advantages, such as being less expensive and not requiring medical underwriting. However, there are also some disadvantages, such as being less flexible and not being portable if you leave your job.

Individual life insurance gives you more control over your coverage and is portable if you change jobs. However, it’s generally more expensive than employer-provided life insurance and requires medical underwriting.

When purchasing an individual life insurance policy or keeping your employer-provided life insurance, compare the cost, coverage limits, and rider options. The best option for you will depend on your needs and budget. Work with a qualified life insurance agent to find the best policy for you.


HOW CAN FUNERAL FUNDS HELP ME?

Finding a policy if you have employer-provided life insurance and you want additional security, working with an independent agency like Funeral Funds will make the process easier and quicker. We understand that each person is different, and we will work with you to find the best policy for your needs.

We will work with you every step to find the plan that fits your financial requirements and budget.

We work with many A+ rated insurance carriers with a wide range of options, so you can be sure to find the perfect policy for your needs.

So, if you are looking for life, burial, cremation, funeral, or final expense insurance, fill out our quote tool on this page or call us at (888) 862-9456, and we can give you an accurate quote.

Call Now ButtonCALL NOW (888) 862-9456