Is Employer-Provided Life Insurance Coverage Sufficient

Every working professional can receive specific perks from the company that he might be working for. While the perks such as travel allowances, paid leaves, and so forth can differ from one company to another, the most common benefit can be the provision of employer-based life insurance coverage. Although employer-provided life insurance can be an essential addition to your financial portfolio, you should not depend on it completely. Therefore, let’s understand why employer-provided life insurance is not sufficient:

  1. Inadequate life cover

Although you can purchase an additional cover at minimal cost, the death benefits offered under employer-provided life insurance might be insufficient. If your family has a financial burden, you might require a cover that can be at least 6-8 times of your annual income to protect them in your absence. While the cover provided by your employer can be adequate for you if you are single, it might not be enough for you if you have a family with a wife and children. When you have high financial responsibilities and dependents, you might require a high coverage amount for their long-term well-being after your demise. This is where the different term insurance benefits can come to your rescue.

  1. Loss of cover after the resignation

Due to the rising job opportunities in India, you might decide to shift from one job to another for the growth of your career. On the other hand, you might choose to quit your current job role due to personal reasons. When you decide to change or quit your current job role, your employer might cease the insurance coverage. If you do not have additional coverage, you might not be able to safeguard your family members from unfortunate events. Since your employer might not allow you to transfer the provided cover to another company that you are working at, you can be at risk of being unprotected financially.

  1. Employer cost-cutting

A cost-effective organisation can mean a tactical cost-cut, which can allow your insurer to pull out the cost components or reduce expenses to improve the company’s profitability. If you are a high-paid employee, your company might either ask you to leave or cancel the provision of your insurance coverage. If there is a change in the strategic decision, such as senior management, which can affect your insurance coverage. Typically, employer-based insurance can depend on all these variable factors that can increase the chances of losing your insurance cover.

  1. Mortality risk

After a specific age, your health condition can be the primary reason for the rise in the life insurance premium. If you decide to invest in an employer-based cover at a later phase of your life, you might have to pay a relatively high price due to the high mortality risk. However, if you purchase an individual term coverage, you can secure yourself and your family financially at a cost-effective rate from the eventualities of life.

  1. Expensive charges

As a working professional, your company can provide you with an employer-based life cover to secure your needs financially. However, you should confirm the overall cost of the insurance policy provided by your employer. Many employers can offer insurance coverage at a relatively high price. On the other hand, term insurance policies can be an affordable way to safeguard your family in your absence in comparison to an employer-provided life insurance coverage.

Since an employer-provided life insurance coverage might not be sufficient for you due to the above-mentioned reasons, you should opt for a separate life insurance coverage for you. A cost-efficient and simplest way to secure yourself can be to purchase term insurance plans. A term plan can be a protection-based plan that can aim to offer your family a financial backup in your absence. Moreover, you can receive survival benefits if you opt for term insurance with a return of premium option that can allow you to lead a smooth retirement period.

In a nutshell, an employer-provided life insurance coverage can be beneficial for you. However, see to it that you do not depend on it solely for your financial coverage. Avail an additional insurance coverage, such as a term plan with maximum term insurance benefits that can cover you and your whole family under a single roof. Before you purchase a plan, use a term insurance calculator to determine the premium amount and compare the different types of term policies available in the market.

John Rogers

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