Employer Provided Life Insurance May Not Be Enough

More companies are upping their benefits to remain competitive. While life insurance is one of the most popular benefits, remember that you should have additional coverage independently from what an employer might provide.
 

In a competitive employment field, more and more companies are offering employer-provided life insurance as a perk. In fact, it’s one of the most popular benefits provided by employers, and a large percentage of employees say it’s a must-have. Sign me up, you say. It’s a great bonus, but is it enough? With more information, you may be better prepared to adjust your life insurance policies accordingly.

Employer-provided life insurance may not be enough to cover your loved ones after you’re gone, and additional insurance coverage could be needed. The problem is that most employees aren’t aware of the discrepancy between what their work offers and what they actually need.

There is, of course, an obvious question here to ponder: How much life insurance do we need? A good rule of thumb is to have a policy that covers between seven and 10 times your annual income.⁸ However, employer-provided life insurance typically covers only between one and three times your salary.⁷ It also represents 42 percent of all life insurance policies.¹⁰ Policyholders may include younger workers who tend to think less about having any coverage at all, but it’s still a concerning statistic.

The benefits of life insurance are meant to provide for your loved ones in your absence, without vastly adjusting their lifestyle. Make sure you’re not among those who leave their families with unmet needs.

• Retention Is Top Benefits Objective, Employers Say, Society for Human Resource Management, 2017.
• Navigating Together: Supporting Employee Well-Being in Uncertain Times, MetLife, 2020.
• Life Insurers Fact Book, American Council of Life Insurers, 2020.
• Employee Benefits in the United States, Bureau of Labor Statistics, 2020.
• 2016 Amica Life Financial Peace of Mind Study, Amica Life, 2016.
• 2017 Life Insurers Across America, American Council of Life Insurers, 2017.
• Why Relying on Life Insurance From Your Employer Can Be a Bad Idea, Monster, 2017.
• Financial Security and Peace of Mind Are More Important Than Ever, American Council of Life Insurers, 2015.
• 2016 Life Insurance Ownership Study, LMIRA, 2016.
• Life Insurance Barometer Report, LIMRA, 2019.

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