Purchasing Term Coverage Outside Employers Group Plan

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Term Life

Ask Dave: Is My Employer’s Group Plan Enough?

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Many employers offer group life insurance as part of a comprehensive benefits package – but is that enough? According to Dave Ramsey, the answer is no. While it is only to your benefit to accept it if your employer offers to pay for your plan, you do need additional coverage outside of your job. Here’s why:

If you leave it, you could lose it.

Most group plans are not portable, meaning if you leave your current employer, you lose that coverage or must medically re-qualify. This is the main reason Dave suggests having no more than 50% of your coverage through your employer’s group plan. If unexpected health issues arise after you leave your job, you may not be able to qualify for the low rates you could be eligible for now.

Your benefit may not be enough.

Typically, the death benefit that comes with an employer plan is far less than you need. Dave recommends 10-12 times your income in coverage, whereas most group plans offer far less. Many group plans also reduce the benefits you receive as you age, driving down the value even further.

Prices can go up (and might be too high to start with).

Depending on the age of the group, your employer’s plan may be more expensive than purchasing a policy on your own. Even if it turns out that your group plan is competitive, the guaranteed rate on these types of policies typically only last two years. That means when that time period is up, you may have to pay more. Dave recommends opting for a 15-20-year level term plan, which guarantees that your rate won’t change during that time.

The bottom line – whether you have coverage through your employer or not, you should get coverage outside of a group plan. Our Zander Guides are here to help by shopping the top-rated term life insurance companies to find the most competitive prices. Get started at the link below or by giving us a call at 1.800.356.4282.

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