Life insurance isn’t something most people like to consider, but it’s something almost everyone needs. The good news is that the Insurance Information Institute reports the majority of U.S. employers offer some amount of life insurance, also known as group life insurance, as a basic benefit. The bad news is employer-sponsored life insurance plans may not provide enough coverage for your loved ones when you’re gone. While it may be tempting to go with the life insurance plan your employer offers and call it a day, here are three reasons why you may want to supplement your policy.
- You’ll lose coverage if you leave. Leaving your employer to work for another company, getting laid off or even switching from full time to part time can all impact your life insurance. Unfortunately, when you go, so, too does your life insurance coverage. If a medical emergency forces you to leave your job or cut back your hours, then you could lose your life insurance.
- Coverage isn’t guaranteed. Financial instability is another reason why relying too heavily on employer-sponsored life insurance isn’t a good idea. There are no guarantees that your company will always be able to offer you coverage. If your company experiences financial hardships, then your employer may decide to drop your group life insurance plan to save money. If your company goes under, then your life insurance goes down with it.
- Coverage isn’t enough. Employers who offer free or low-cost life insurance typically provide coverage equal to twice your annual salary. Bankrate® experts recommend that if you have debt, including a mortgage or car loans, or dependents who rely on you for financial support, then you’ll need coverage worth 5 to 10 times your salary to make sure all your obligations are met. While you can purchase more life insurance through your employer, it still might not be enough—that is because most employers offer a one-size-fits-all plan. If you’re looking for more plan options, then you won’t be able to get it through an employer-sponsored plan.
The Bottom Line
While it may be tempting to rely on your employer-sponsored life insurance plan, if you have dependents, then you’ll want to explore other options. Navy Federal Financial Group’s supplemental life insurance coverage can help you make up for what your employer-sponsored policy lacks. Best of all, it’s affordable. You can estimate how much life insurance you’ll need using Navy Federal’s Life Insurance Needs Calculator.