Tips for Understanding the Limits of Group Coverage

If you have group life insurance coverage through your employer, it may seem like you have all the insurance you need. What is more, the premium is paid for by your employer so you not only have a great benefit your family has sufficient coverage needed in the event of your death. Yet, many employers limit the group coverage to about $50,000.00 per employee due to tax concerns.

If your coverage is even less than that, do you really have plenty of life insurance simply by having coverage through your job? You may not. The life insurance will terminate, too, when you leave the job. This is why it is important to supplement any group coverage with an individual life insurance policy. If you do not hold onto this job then, in another few years if you are working someplace else, you will not have any coverage at all.

Why you Need Individual Insurance

If anything were to change with your health in that time, it may become very difficult to qualify for an individual insurance plan. Getting insurance through a job is a great benefit, but because the limits to the benefits are dictated by your employer, it might be best to prepare yourself by obtaining an individual policy. This individual policy should have a level of coverage that would supplement the work policy so that your family would not be caught with an insufficient amount of money in the wake of your death.

For example, if an employer limits coverage to your yearly salary and you earn $30,000.00 per year, would that sum be sufficient to get your family through? It essentially would be enough for your family to survive on for one year. However, this would not include the cost for planning and arranging a funeral, nor would it include added expenses for final medical bills.

If your children would be in need of day care at that point so your surviving spouse could return to work full time this sum of money may not be nearly enough. Your family could potentially be faced with financial difficulties shortly after going through the insurance benefits and do so in less than a year's time. This is why it can make sense to purchase an additional life insurance policy.

You could find an affordable term plan that could provide ample supplemental coverage for an amount you choose based upon realistic calculations for living expenses and debts. In the event you change jobs and have to leave your group coverage behind, your family would not be without life insurance entirely. Plus, in the event your health condition was to change, you would not be stuck without being able to qualify for a brand new plan when you start another job.

This might be the case if you do not have an existing individual policy to supplement your group plan. You would essentially find yourself unable to get covered. The fact that you may not get group coverage at your next job makes going without an individual policy something of a risk you probably do not want to take. Buying a plan of your own allows you to have much greater control over how much coverage you carry so there are no gaps in income which your family would likely face after your death.

You can plan on having money for your children, their day care or schooling. You can even buy enough coverage to allow your family to pay off existing debts. These tips for understanding the limits of group coverage should help you realize why having supplemental coverage is so important.

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