It is not uncommon in this country for employers to offer optional life insurance policies through the company as an added perk to the benefits package. Though purchased through an outside insurance agency, these policies are often very advantageous. Yet, at the same time, it is important for the employee and his or her family to understand the potential downsides of buying with the company versus purchasing a policy direct from an life insurance agent.
Pros There are many reasons why people opt to take advantage of this offering and all are worthwhile motives. After all, these employee packages are often quick and easy to join into. They can be far more affordable than an individual policy and many times they don’t even require any sort of physical examination.
On the company’s end, this can be a great selling point to potential employees and can also act a huge tax deduction at the end of the year for those companies that pay a portion or all of the expense.
Cons Though this might seem too good to pass up, that might not be the case. It is important to remember that not all policies are created equally. For instance, some will include a built-in disability insurance to safeguard against lost wages as a result of falling to ill or becoming so seriously injured that the insured can no longer work. That add-on can be a huge savior should something unfortunate take place and can payout as much as sixty-percent of the person’s yearly earnings during the downtime. The work policy may or may not include that. So, this might not be a true disadvantage, but it is something to seriously consider before signing. In most cases, these policies offered through the business cannot be customized, so you must take what you can get if you decide to opt for that.
In addition to this, these policies are not always transferrable. If you lose your job, are laid-off or change companies, you might lose the coverage. For each year you wait to buy in to a policy, the more expensive the premiums will be. So, while you could have been paying toward a twenty- or thirty- year term life insurance in Austin TX, instead you were paying toward one that ended abruptly and left you to start all over.
It is important to understand that these policies offered by companies are not subpar in many cases. They may be perfect and just enough for some employees. In fact, some are so excellent that they can fit all of your needs and even be transferred should you need to leave the company. It is simply important to do the research before opting for any plan.
