Question: Should I Buy My Life Insurance Through Work?
Many employers will offer basic life insurance to their employees an a part of the employee benefits package. This life insurance is usually for a small amount or equal to one year's salary. This may be enough coverage if you are single with no dependents. They often offer you the option to purchase more insurance in order to raise your coverage amount. However, your work should not be the primary place that you buy life insurance from. If you were to lose your job, you would lose your life insurance coverage. It would add just one more thing to worry about.
You need to buy enough life insurance to cover your needs. You should look for a term life policy of about eight times your annual income to cover your expenses. The insurance that you have at work should be considered as an addition to what you already have. Although you may be tempted to use it and get less insurance, be sure that your family will be able to get by without it since you may lose it if you were to lose your job. As your salary or expenses go up, you should take the time to increase your life insurance coverage. Once you have paid off your home, and put your children through college, you may decide to reduce your life insurance coverage. When you are in your twenties, you do need to cover your expenses. You may not choose to carry life insurance until you start a family. If you do this, make sure you have enough set aside to cover your burial costs, so that it is not a burden on your friends and family.
If you have a preexisting medical condition such as diabetes,it may be more difficult to qualify for a traditional term life insurance policy. If this is the case, you may want to max out the work life insurance if you do qualify for it. This is not the best solution to the problem, because you will lose the coverage when you change jobs. But it is better have some coverage than to have none at all.
When you look for life insurance be sure to shop several different policies to get the best rate available. Life insurance companies do a risk assessment when they insure you and you may be declined for serious health conditions or charged a higher rate if they feel that your risk is greater. Term life offers the lowest rates; you can save money by paying annually instead of monthly. You should also avoid converting term insurance into whole life insurance.
Whole life insurance is not a great insurance option because the investment side of it offers a lower rate of return, and you are able to purchase much larger amounts of insurance at a lower rate than term insurance. If you already have a whole life policy, you may want to consider cashing it in and looking for a term life policy. If you choose to do this, you should have your term life coverage in place before cashing out the policy. Additionally, you should keep your whole life insurance if you do have a medical condition that makes it difficult to get life insurance.