Life Insurance Benefits in the Workplace

Starting at a new workplace can open up a world of exciting opportunities and career advancement. Life insurance may be the last thing on your mind in those first few weeks as you try to adapt to new bosses, new co-workers, and new demands. However, there are some issues that you need to consider before you automatically agree to your employer’s insurance plan.

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Evolving Insurance coverage systems

Fewer and fewer American employers offer completely paid benefits anymore, instead offering “voluntary” benefits (so-named because the employee pays for them themselves) to supplement traditional “paid” benefits. Voluntary benefits often include life insurance. Sales of voluntary benefits have grown 25% annually for the past few years and now make up 50% of all benefits sales. Of course, workers still have to make the important choice of buying their company’s voluntary benefits, looking elsewhere for their own life insurance plan, or opting to integrate both. 

Isn't My Company’s Benefit Plan My Best Option?

Usually employees can purchase voluntary life insurance benefits at a reduced price because large employers can get special group rates for their workers. Also, voluntary benefit plans do not require medical exams and cannot exclude employees based on medical history or current health status, making the plans still cheaper. However, just because these plans are available to all workers does not necessarily mean that they are right for you.

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Employer Life Insurance vs Outside Carriers

Here are some issues to consider before you choose between your employer’s benefits package and an outside insurance carrier:

• Coverage offered by employers will often disappear if you change jobs again, along with all of the money you've put into it.
• The wholesale-bought plan may seem inexpensive, but premiums often keep rising year after year.
• The plan offered by your workplace was designed to accommodate as many employees as possible, so your plan will be the same as a coworker’s, who may be much older or younger than you and have different coverage needs. According to the Life Foundation, most Americans with life insurance do not have as much coverage as they should, based on their age, health and family’s status. These generic policies may not be optimal for every worker, and you may need to look elsewhere to get the full coverage you need.
• You can receive certain tax breaks from purchasing your own plan that you would otherwise have to forgo.
• If you are a young, healthy worker, researching your own plan is even more advisable, since you are not likely to be denied insurance coverage from outside carriers, and may not need (or want to pay for) all of the options that an employer’s plan may offer.
• More mature employees may also benefit from having the additional options and flexibility that comes from purchasing their life insurance through a broker, because it guarantees that you pay for exactly what you want, and no more.
• With the advent of online life insurance, comparing plans to fit your lifestyle has never been easier.

The More You Know...

In short, the best way to shop for a life insurance plan after you change your job is to research as much as possible. Know all of your options, choose an outside customized plan if you need one, and don’t just assume that your company knows what life insurance policy is best for you.

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