Insurance Tidbits:

Is Your Employer Sponsored Life Insurance the Best Value?

The 4^th quarter is here and it will soon be time to select your employer sponsored benefits.  Among your choices is life insurance.  Most people believe that the insurance offered by their employer provides the best value.  These policies are called “Group” life policies and allow most employees to secure coverage without fear of being turned down.    However, if you are reasonably healthy, you likely have better options available outside of your employer.  Consider the following:

Rate- Group policies are rated based on the characteristics of the group.  Since most employees are eligible, even those who are not healthy, the overall rate for each member of the group is higher.  If you secure your own policy, it will be rated on your health which may be better than that of your employer’s group.  As a result, you may be eligible for a lower rate.

Another issue with Group policies is that rates typically rise as you get older.  With an individual term policy, you can hold the rate stable for up to 30 years.  Over time, this stability can result in a significant savings.

Flexibility- Most “Group” policies are based on your continued employment.  What happens if you retire or leave your company and work elsewhere, and similar benefits are not available?  If your health has changed, you may also have trouble finding affordable coverage in the open market.  Securing your own policy allows you the flexibility to change your work situation without worrying about your coverage.

Coverage Limits- Most Group policies limit coverage to a factor of your income. (Example: Coverage Limit = 3 times your income)   However, if you desire more or less coverage, there is little or no flexibility.  Working with a professional agent, you can select the proper amount of coverage for your specific needs.

Any free coverage offered by your employer is certainly worth taking.  However, consider talking with a professional agent before you pay for any additional coverage that may be offered by your employer.    

Jon Gardner, CPCU is an Insurance Agent with Farmers Insurance who offers complimentary insurance evaluations.  His office is located at 27907 Smyth Dr., Suite #101 in Valencia.  He can be reached at (661) 775-9244.