Don’t Rely on Employer Life Insurance Coverage Alone

Fewer employers are offering life insurance to workers as an employee benefit. Only 48% of employers offered life insurance as an employee perk, as of 2016. This reflects a steady decline of 23% compared to 2006 levels, according to the Life Insurance Marketing and Research Association (LIMRA). The decline is curious, given that some six in 10 employees rank employer-paid life insurance as an "important" or "very important" part of an employer's benefits package.

Americans are under insured

Americans are dangerously under-protected when it comes to life insurance. Three in four American households without life insurance report they would have immediate or near-immediate trouble paying for basic living expenses in the event of the death of a primary wage earner. But relying solely on group life insurance coverage from your employer may not be sufficient. Tax laws limit the deductibility of employer-paid life insurance premiums to those required to provide a death benefit of $50,000, when many American working families need several times that amount of protection. Even among those who have group life insurance from their employers, half still report they would have immediate or near-immediate hardship in the event of a breadwinner's unexpected death, according to LIMRA figures.

Own your own coverage

Even if employers weren't cutting back on life insurance as an employee benefit, there are many good reasons to contact an insurance agent and take out your own life insurance policy. Here are five of them:

1. It goes where you go. If you leave the firm, you may lose your coverage. If you have a history of health issues, it may be difficult or impossible to get life insurance at that time. If you own your own policy, you don't have to worry about losing your life insurance when you leave the company.
2. More coverage. While employers often limit what they'll pay for to a death benefit of $50,000, or one to two times your salary, this may not be nearly enough. Experts often recommend owning at least 10-20 years' worth of your current income in life insurance protection - particularly for younger families early in their careers.
3. More features. While most workplace life insurance policies are one-size-fits-all, buying your coverage from an agent in the open market means you can customize your insurance policy. For example, you can choose whole life or universal life insurance for permanent life insurance that accumulates cash value. You can also get coverage to cover your spouse or domestic partner, whether or not they are working. Or you can choose to layer affordable term insurance with permanent coverage and convert your term insurance to more valuable permanent coverage over time, as your income increases.
4. Broader protection. As you go through your insurance needs analysis, you may uncover the need for other forms of  insurance protection not provided by your employer. Since 2006, employers have become less likely to offer important insurance benefits like long-term care insurance, critical illness or cancer insurance and long-term disability coverage.
5. You control the policy. If you get all your life insurance from your employer, they could shut their doors, lay you off, go bankrupt, or simply cancel the benefit tomorrow. Again, if you've had medical problems, it could be difficult or impossible for you to line up replacement coverage. By owning your own policy and not relying on your employer, you guarantee that no one can terminate the policy except you.

For more information, feel free to Contact Neptune Financial to schedule an appointment. Basic Understanding This blog is being provided for informational or educational purposes only. It does not take into an investment objectives or financial situation of any individual, family, prospect, client, or prospective clients. The information is not written or intended as investment advice and is not a recommendation about managing or investing your retirement savings. An individual seeking information regarding their investment or retirement needs should contact a financial professional. Neptune Financial, and their financial professionals do not render tax and legal advice. Please consult your tax and legal advisors regarding your personal tax or legal concerns.