The Pitfalls Of Work Sponsored Life Insurance

Work Life Insurance

The Pitfalls Of Work Sponsored Life Insurance

As a life insurance agent, it is common to hear the misconception that people are fully covered and have adequate coverage with life insurance because their employer provides them with a plan. This however could not be further from the truth. Although employer sponsored life insurance is inexpensive and coverage is guaranteed to a certain limit, it is not something that can be counted on or relied on to take care of your family. Life insurance is the most important purchase you make in your life if you have a family that relies on your income. Listed below are some of the pitfalls of work sponsored life insurance:

The death benefit may not be enough for your family

Generally there are limits on the amount of coverage that can be purchased. The amount of coverage is usually based on your income. In some cases, you can purchase additional coverage up to four to six times your salary, but that may require a medical exam. Some professionals recommend a person carry as much as twelve times their salary, so life insurance provided by your employer falls way short of that figure. The exact amount of coverage needed varies from person to person and the exact plan varies as well.

If you are single, have no children, no mortgage and have no assets with a co-signer, then employer sponsored life insurance may be enough coverage for you,

When you leave your job, you lose your coverage

People every experience the loss of health insurance and the same generally applies to life insurance when you lose your job or decide to leave. Not having any life insurance during this time could be detrimental to your family, should something happen to you. Also, if during this gap you are diagnosed with a critical or terminal illness, you may become uninsurable. This is just another critical aspect to consider. Most work life insurance policies lack a convertibility option, but even when that is an option, the new policy is based on your current age and risk class at that time and premiums will reflect such.

The premiums may not be competitive

Depending on the plans offered by the employer, the policy's premiums may not be the best available for you. Most employer sponsored life insurance plans usually have an increasing premium that will occur in five year increments. If you are healthy and insurable, seeking personal life insurance is worth looking into. Just as you do with most other things you purchase and considering how important life insurance is, you should make sure you are getting the most coverage possible for the best possible price.


It is always important to make sure you meet with a qualified licensed life insurance professional to determine what options are available for you. Contact Family First Life to schedule a consultation with one of our agents, today!