Your employer’s life insurance policy can serve as a valuable safety net if something were to happen to you. If you already have this benefit at work, you’re taking an important step to protect your family.
But do you know what type of life insurance coverage you have? Is it enough? Is it even the most affordable option for you? What would happen to your coverage if you lost your job?
Group life insurance can be a valuable benefit, but it’s only good as long as you’re employed there. Plus, the coverage is typically intended to accommodate all employees – and life insurance is not a “one size fits all” solution.
The average employer policy provides $104,7691 in coverage, while the average individual term life insurance policy coverage amount in the U.S. is nearly $500,0002 Depending on your situation, your life insurance coverage through work may not be enough. So, how do you determine the amount of coverage you may need?
Use the acronym L-I-F-E as a guide:
- Liabilities: Will your family need to pay off a mortgage, car loan or other debt?
- Income: Will your family need to replace your income?
- Final expenses: Do you have the resources to cover funeral expenses?
- Education needs: Do you need to put children through school?
Unlike group insurance, individual life insurance policies may provide more flexibility, including the ability to modify coverage, which could better align your coverage with your needs. An individual policy may be cheaper than group policies if you’re young and healthy. This would allow you to purchase a greater amount of coverage, if needed. If you have other needs, such as leaving a legacy, you may consider permanent insurance, which is typically not offered through employers.
Before you simply “check the box” for your employer’s coverage, talk to your financial advisor. They can look at your complete financial situation, including your existing coverage and other assets, to help you tailor a life insurance policy that fits your family’s needs.
1GenRe 2020 U.S. Group Term Life Market Survey.
Edward Jones is a licensed insurance producer in all states and Washington, D.C., through Edward D. Jones & Co., L.P., and in California, New Mexico and Massachusetts through Edward Jones Insurance Agency of California, L.L.C.; Edward Jones Insurance Agency of New Mexico, L.L.C.; and Edward Jones Insurance Agency of Massachusetts, L.L.C.