Is employer-provided life insurance enough?

Life insurance provided by your employer, often in the amount of one to two times your annual salary, may not be enough.

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Life insurance is one of the most important insurance types to have both for policyholders and their beneficiaries. In exchange for a fee to a provider each month (often cheaper if paid annually), policyholders can rest easy knowing that their loved ones will have financial support in the event of their death. 

Some policy types will even allow the insured to access their account for cash while they’re still alive.

While the benefits of life insurance are multiple and substantial, the amount policyholders should have varies significantly. The question of the “right” amount is often compounded by the fact that many employers in the U.S. already provide policies to their employees, often for no extra charge.

But is employer-provided life insurance enough? Or should you supplement your policy with additional coverage? A life insurance expert can answer these questions and help you get started with a free price quote now so you know exactly what to expect.

Is employer-provided life insurance enough?

As is the norm with personal finance considerations, there is no one-size-fits-all answer. Here are some guidelines, however, to help determine when your employer-provided coverage is enough … and when it may be time to add to it.

When employer-provided life insurance is sufficient

Life insurance provided by your employer, often in the amount of one to two times your annual salary, may be enough if you fall into one or more of the following categories:

  • If you’re single and not married: If you’re not married then you may be able to get away with just the insurance you have from your job. If you don’t have a partner counting on you financially then a baseline of insurance could be enough.
  • If you don’t own a home: If you don’t own a home, or are renting from someone else, then you won’t be leaving a mortgage to pay off in your absence. Accordingly, an employer-backed plan may be enough.
  • If you don’t have children: Many policyholders designate their children as their beneficiaries. But if you don’t have children that depend on you for financial support you may be able to get away with just an employer plan.

One note: Just because you fall into one of these categories, it doesn’t mean you shouldn’t get additional coverage anyway. Everyone’s budgets and personal financial goals are different. Learn more now.

When employer-provided life insurance isn’t enough

There are times when an employer-provided life insurance policy just won’t cut it. These types of plans may not be enough:

  • If you just got married: Just like a policy from your job may be enough if you’re single, it’s likely not enough after you’ve gotten married. Life milestones affect many factors of your financial health and life insurance is one of them. If you want to leave your partner covered in case of an emergency then you should likely supplement the life insurance policy you have from your employer.
  • If you just bought a home: Mortgages almost always come in 30 or 15-year terms. Do the math. Will your employer-provided plan be enough to cover what you owe to the bank and will owe to the bank in the coming years and decades? If not, then you’ll probably want to increase your coverage amount. 
  • If your partner is no longer working: If your spouse or partner is no longer employed, regardless of the reason, you should think about bumping your life insurance protection. Two salaries – and two insurance policies – are better than one. Should you reduce or eliminate one of those then you’ll want to make sure you have a commensurate level of protection by increasing the amount of life insurance you have.

The bottom line

The decision to increase your life insurance coverage is a personal one dependent upon a variety of factors and considerations. 

The above categories are a good place to start. Consider speaking with a life insurance expert now who can help you build a customized and cost-effective policy. 

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