Do I purchase an “Individual” life insurance policy? Or, do I just get it at work?
Sixty percent of employees have access to life insurance through work1 (commonly referred to as “group life insurance”). How does this coverage differ from an “Individual” life insurance policy (purchased separately from work)? When does it make sense to buy an individual policy?
BASIC Term Life Insurance Policy
For some, the policy coverage is a flat amount (e.g., $25K of coverage). For others, it is based on one’s salary (e.g., coverage = 1 x salary).
Advantages:
Disadvantages:
SUPPLEMENTAL Term Life Insurance Policy
Some employers offer the option to buy additional life insurance – which can be 2x salary, 3x salary, etc. This can be added to the “Basic” coverage.
Advantages:
Disadvantages:
INDIVIDUAL Term Life Insurance Policy
A policy purchased from an insurance company or a licensed agent – outside of the workplace.
Advantages:
Disadvantages:
1. Always take advantage of free “Basic” employer-provided coverage.
2. Determine how much insurance you’d like to have.
3. Get quotes for both “Individual” and “Supplemental” group life insurance for the coverage needed in addition to the “Basic” employer policy.
4. When making your decision, consider the features/benefits that are important to you.
1 Employee Benefits in the United States - March 2018, Bureau of Labor Statistics, July 20, 2018