Do I Need Another Life Insurance Policy If I Have One from Work?

Life insurance Policy

If you’re a salaried employee whose employer provides a life insurance policy, you might be tempted to think it’s enough. If you’re young, single, and debt-free, it might be enough. However, if you’re not, it probably isn’t.

There is no legal limit to how many life insurance policies you can get. Despite this, insurance companies have caps to protect themselves.

Regardless, having an individual life insurance policy is helpful, whether you’re young or not. In fact, it is better to purchase one while you’re young and healthy, as it will be more affordable as compared to when you’re older.

There are several reasons why we advocate purchasing an individual life insurance policy. And in this article, we will address some of them.

Advantages of Employer-Provided Life Insurance Policies

While we recommend getting a personal life insurance policy, an employer-provided policy certainly has its advantages. Some of these are listed below:

  • They are usually free or cheap – If your employer offers you a life insurance policy, chances are it will either be free or offered at discounted rates. Employers do this to enhance employee benefits and ensure they’re engaged.
  • They are easier to get – Getting a term life insurance can sometimes be a hassle, especially if you have a health condition that might prevent you from getting one. However, your employer-provided life insurance policy will almost certainly be easier to qualify for.

Why You Should Have a Personal Life Insurance Policy

You should, at least, have one personal life insurance policy along with your employer-provided policy, if you have one. Some of the reasons for this include:

  • It transcends your job – While you can move some employer-provided life insurance policies from your old job to your new one or convert them to an individual policy, most employer-provided life insurance policies do not offer this benefit. This means that if you leave your job, you will be left unprotected.

With an individual policy, this is not the case. Regardless of how many times you change employers, you will never lose your personal life insurance. 

  • It provides more cover – Typically, employer-provided life insurance policies only offer multiple times your salary. For the typical 100-employee firm, these policies offer one-time employee salaries. If you graduated college recently and have no debt, this might be enough. However, if you have debts or people who are dependent on your salary, for example, a spouse, children, parents, or siblings, one-time your salary work life insurance policy is completely inadequate.

With individual plans, you can get several times more coverage. In fact, a basic life insurance plan should typically provide coverage that would be approximately 10 times your salary.

  • To accommodate changes in your financial obligations – An individual life insurance policy can provide cover if you take on more financial obligations. For instance, if you purchase a home that has a larger mortgage or plan to have more children. While you could replace your current insurance policy, purchasing a new one might be more beneficial.

To conclude, it is advisable to purchase an individual insurance policy in addition to the one your employer provides. The benefits it offers are simply too good to let go of. The primary benefit is that it will provide more protection for your loved ones.

If you want to purchase an individual plan, we recommend you talk to one of our agents at American Premier Insurance. Our experienced agents can help you determine the plan that is best suited for your requirements.