Nowadays, most organizations, regardless of their size, offer life insurance benefits as part of the package to their employees.
No doubt it is a desirable benefit but does it satisfy your requirements adequately? It is crucial to realize the scope of the life insurance offered by your employer to plan your finances accordingly.
It is safe to say that buying insurance is one of the most significant financial decisions in everyone’s life. If you are like most people with responsibilities and dependents on them, life insurance is indispensable. With the assurance of a financial support system, you can remain stress-free and enjoy your life.
Hence, it is essential to understand how life insurance offered by your employer works. Once you are familiar with it, you can take the necessary steps to overcome the deficiencies.
Employer Life Insurance
Multiple types of life insurance policies are available in the market to satisfy diverse needs. Employers usually go for a group insurance policy to cover all employees under one plan. The policy is structured to protect their family members against unprecedented circumstances. Such a plan is efficient and relatively inexpensive to the employer.
As you may know, life insurance is the first step towards creating a balanced financial plan for yourself. However, it is vital to understand that employer life insurance is not the only way to go about it. Many people do not realize that they can invest in an individual life insurance plan besides availing the benefit of employer life insurance.
Here are some reasons why life insurance offered by your employer may not fulfill all your financial goals:
#1 Sum Assured Selected By Employer
From the perspective of the employer, they want to minimize the cost to the company. Therefore, group life insurance policies may not have high face-value. It is upto them to decide the monetary worth of the coverage, which may be inadequate in a time of need for different employees.
The purpose of buying life insurance is to give your family members the necessary support in your absence. It fails to serve its purpose if the sum assured is insufficient. You need to consider the rising costs of living each year to evaluate the suitable coverage amount. The life insurance benefit should at least be enough to maintain their standard of living in the future.
#2 No Tax Benefits For Individuals
In most cases, the employer life insurance premiums are paid by the company. The contract is between the employer and the insurer. Hence, individual employees cannot claim the tax benefits for the life insurance policy.
For group life insurance plans, the cost to the employer is eligible for a tax deduction. It is considered as a part of the business expenses for the organization.
#3 Limited Insurance Coverage
As mentioned earlier, the employer life insurance coverage may not be enough to meet the requirements. Apart from that, additional benefits generally offered with standalone life insurance plans are also not applicable. The employees cannot customize the life insurance policy by the employer to suit their needs.
For instance, riders are add-ons offered by most insurance providers to enhance the coverage of the life insurance plan. It helps in covering all your bases with a single plan. With the employer life insurance plan, employees find it difficult to attach a rider and maximize the policy benefits.
#4 Less Control Over the Policy Terms
When you are covered under the employer life insurance plan, you do not have much say. It is in the hands of your employer to select the features and benefits collectively offered to all the employees. Moreover, employee benefits are the first thing that organizations cut off when they are not performing well.
#5 No Guarantee
It is critical to recognize that the employer’s life insurance is a benefit, not a guarantee. No matter for how many year you are working in the company, it is not a permanent benefit. You may decide to change your job or, eventually, retire. With that, the employer life insurance coverage will also cease.
Simply put, depending solely on the employer’s life insurance is not favorable. In case of an unexpected crisis, you may find yourself without financial protection. When such a situation occurs, you will have to start all over again.
Secure Your Financial Needs The Right Way
It is in your best interest to bring your investment decisions under scrutiny from time to time. You may feel complacent with the employer’s life insurance when, in reality, it can fail you in a crisis. When it is about making important life decisions, it is always better to have extra layers of protection.
Remember to go with a reliable insurance provider to optimize the benefits of your life insurance policy. The support of a trustworthy life insurance plan will allow you to spend a relaxed life with your family.
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