By: John M. Campanola, Agent New York Life Insurance Company
Special to the Boca and Delray newspapers
If your workplace offers life insurance at a low cost (or no cost) to you, you may assume it provides sufficient coverage for your family — and not bother to give the subject a second thought. But you owe it to yourself, and your family, to make a more careful assessment. You may find that the coverage offered by your employer, welcome as it is, won’t actually cover your family’s future needs.
Here’s how to figure out whether your employer offers adequate coverage for you:
Find out how much coverage is offered.
Your workplace’s group life insurance may be included in your benefits package — and you may be automatically enrolled — which makes it very convenient. However, it’s worthwhile to do a careful review of the coverage.
The amount your employer offers may start at $25,000 and range up to your annual salary. But a 2015 study by the Life Insurance and Market Research Association (LIMRA) reveals that 65 percent of employees with employer-sponsored group life insurance feel they need more insurance than what their employer provides.
Assess your family’s long-term needs.
Once you get married — or if you have dependents — you will probably want to increase your coverage. So that $25,000 policy may not seem like much once you sit down to do the math and figure out your needs five, 10, or 20 years down the line. You’ll probably want to make sure there’s enough coverage to pay off a mortgage, send your kids to college, or help your spouse comfortably retire. (It is often recommended that insurance coverage be five to 10 times your annual salary.)
Even if you’re single, the group policy through your workplace may not be enough after you consider the potential total of your final expenses. Furthermore, if you have a co-signer for a mortgage, car loan, or student loans, remember that the burden will probably rest with your co-signer should something happen to you.
What happens if you change jobs?
Long gone are the days when people expected to stay at the same job for 30 years. A recent survey by LinkedIn found that younger workers change jobs, on average, four times in their first 10 years out of college.
If you job hop, you’ll lose your workplace insurance when you leave the company. And while you may be able to convert the group life insurance policy from your old employer into an individual policy, the cost of that coverage could go up significantly.
Look into options to supplement your coverage. If you find your employer’s group life to be insufficient, you may want to add supplemental coverage.
Concerned that you can’t afford it? According to LIMRA, people estimate that life insurance will cost three times as much as it actually does. You’ll need to balance your family’s needs with the cost of insurance. But if you look into your options for a supplemental policy, you may find that life insurance is more affordable than you think.
This educational third-party article is provided as a courtesy by John M. Campanola, Agent, New York Life Insurance Company. To learn more about the information or topics discussed, please contact John M. Campanola at 561-642-5180.