I Have a Life Insurance Policy From My Employer - Isn’t That Enough?
There are important components to consider with life insurance provided by an employer. The life insurance may only be with you while you are working for that company. Unless you have documentation in writing that says otherwise, if you leave the employer, are laid off or terminated the life insurance coverage on you and any family members will end. This is why it is very important to consider having a life insurance policy of your own that is not dependent on an employer.
As far as determining how much coverage is enough, you first need to understand what type of life insurance coverage the employer is providing. Second, what is the amount of money they would pay to your beneficiaries if you passed away while working for that employer. The best way to understand how much life insurance you should have is by doing a needs assessment. You need to first look at your total income and your spouse's income, if there is one. If you are to pass away your income will go away. So, you would want to consider how many years you would want to replace your income. Let’s say you want to replace if for 5 years.You would simply multiply your total income by 5 years or whatever number of years you choose. If you have young children financially dependent on you then need to think of the child’s future and the cost of such things as a college education. If you are not here to pay for that education who will and how will they do it? You also need to factor in your total liabilities. These would be any debts, mortgages or loans that are outstanding. Adding up these different amounts will give you an estimate of the amount of life insurance you should consider having in place.
Life insurance provided by an employer is a great benefit. Again, it is important to understand what type of insurance and how much coverage they are providing, if you were to pass away while still under their employment. Take the time to do a needs assessment and understand the true amount of life insurance coverage you should have that is separate from any employer.
About the author: Dan Cody has been in the life insurance business for over 7 years. He loves playing a variety of instruments including the guitar, bass, drums, and piano. He also supports cancer research foundations and volunteers at local pet shelters. Dan enjoys helping customers understand life insurance, so they can find a solid policy that fits their needs. You can reach Dan at 1-800-651-1953 or DCody@Pivot.com.